As Filed with the Securities and Exchange Commission on April 14, 2003
File No. 333-66452
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3
ON FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LINCOLN BENEFIT LIFE COMPANY
(Exact name of Registrant as Specified in its Charter)
Nebraska 6300 470221457
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2940 South 84th St., Lincoln, Nebraska 68506
1-800-525-9287
(Address of registrant's principal executive offices)
WILLIAM F. EMMONS, ESQ.
LINCOLN BENEFIT LIFE COMPANY
2940 South 84th St.
LINCOLN, NE 68506
1-800-525-9287
(Name of agent for service)
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Copy to:
JOAN E. BOROS, ESQ.
CHRISTOPHER S. PETITO, ESQ.
Jorden Burt LLP
1025 Thomas Jefferson Street N.W.
Suite 400 East
Washington, D. C. 20007-0805
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / X /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
/ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
Calculation of Registration Fee
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Registration
Securities to be Registered Registered Unit Price Fee
Market Value Adjusted
Interest under Individual
Flexible Premium
Deferred Variable Annuity
Contracts. . . . . . . . . . . . . . * * * *
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* These Contracts are not issued in predetermined amounts or units. A
maximum aggregate offering price of $25,000,000 was previously registered.
No additional amount of securities is being registered by this post-
effective amendment to the registration statement.
CROSS REFERENCE SHEET
(Pursuant to Regulation S-K, Item 501(b)
Caption in Prospectus
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1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus. . . . . . . . . Facing Page and Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus. . . . . . . . . . . . . . . . . . . . . .Table of Contents
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges. . . . . . . . . . . . . Questions and Answers about Your Contract; Not Applicable as to Ratio of
Earnings to Fixed Charges
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . Allocation of Purchase Payments; The Investment and Fixed Account
Options; Lincoln Benefit Life Company; Investments by Lincoln Benefit
5. Determination of Offering Price . . . . . . . . . . . . Not Applicable
6. Dilution. . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders. . . . . . . . . . . . . . . . Not Applicable
8. Plan of Distribution. . . . . . . . . . . . . . . . . . Distribution of Contracts
9. Description of Securities to be Registered. . . . . . . Questions and Answers about your Contract; Description of the Contracts;
Annuity Benefits; Other Contract Benefits; Contract Charges
10. Interests of Named Experts and Counsel. . . . . . . . . . . . .Experts; Legal Matters
11. Information with respect to Registrant. . . . . . . . . Taxes; Description of Lincoln Benefit Life Company and the Separate
Account; Legal Proceedings; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liability. . . . . Part II, Item 17.
THE LBL ADVANTAGE VARIABLE ANNUITY
Prospectus dated May 1, 2003
Lincoln Benefit Life Company ("LINCOLN BENEFIT" "WE", OR "US") is offering the
LBL Advantage Variable Annuity, a group and individual flexible premium deferred
variable annuity contract ("CONTRACT"). This prospectus contains information
about the Contract that you should know before investing. Please keep it for
future reference.
The Contract currently offers 44 "INVESTMENT ALTERNATIVES" The investment
alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and
41variable subaccounts ("VARIABLE SUBACCOUNTS") of the Lincoln Benefit Life
Variable Annuity Account ("VARIABLE ACCOUNT"). Each Variable Subaccount invests
exclusively in shares of the portfolios ("PORTFOLIOS") of the following mutual
funds ("FUNDS"):
AIM VARIABLE INSURANCE FUNDS PIMCO ADVISERS VIT
THE ALGER AMERICAN FUND PIMCO VARIABLE INSURANCE TRUST
FIDELITY(R) VARIABLE INSURANCE PUTNAM VARIABLE TRUST
PRODUCTS RYDEX VARIABLE TRUST
JANUS ASPEN SERIES SALOMON BROTHERS VARIABLE SERIES FUNDS
LAZARD RETIREMENT SERIES, INC. INC
LSA VARIABLE SERIES TRUST SCUDDER VARIABLE TRUST
MFS VARIABLE INSURANCE TRUST THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
OPPENHEIMER VARIABLE ACCOUNT FUNDS VAN KAMPEN LIFE INVESTMENT TRUST
PANORAMA SERIES FUND, INC.
Each Fund has multiple Portfolios. Not all of the Funds and/or Portfolios,
however, may be available with your Contract. You should check with your
representative for further information on the availability of Funds and/or
Portfolios. Your annuity application will list all available Portfolios.
Lincoln Benefit has filed a Statement of Additional Information, dated May 1,
2003 with the Securities and Exchange Commission ("SEC"). It contains more
information about the Contract and is incorporated herein by reference, which
means it is legally a part of this prospectus. Its table of contents appears on
page 56 of this prospectus. For a free copy, please write or call us at the
address or telephone number above, or go to the SEC's Web site
(http://www.sec.gov). You can find other information and documents about us,
including documents that are legally part of this prospectus, at the SEC's Web
site.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR HAS
IT PASSED ON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS THAT
HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS
NOTICES OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY SUCH INSTITUTIONS
OR ANY FEDERAL REGULATORY AGENCY. INVESTMENT IN THE CONTRACTS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
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PAGE
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OVERVIEW
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Important Terms 3
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The Contract At A Glance 4
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How the Contract Works 7
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Expense Table 8
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Financial Information 11
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CONTRACT FEATURES
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The Contract 12
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Purchases 13
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Contract Value 14
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Investment Alternatives
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The Variable Subaccounts 16
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The Fixed Account Options 20
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Transfers 23
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Expenses 24
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Access To Your Money 26
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Contract Loans for 401(a) and 403(b) Contracts 28
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Income Payments 29
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PAGE
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Death Benefits 32
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Other Information
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More Information: 36
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Lincoln Benefit Life Company 36
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The Variable Account 37
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The Portfolios 37
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The Contract 37
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Qualified Plans 38
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Legal Matters 38
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Taxes 39
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Annual Reports and Other Documents 45
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Performance Information 45
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APPENDIX A - ACCUMULATION UNIT VALUES 46
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APPENDIX B - MARKET VALUE ADJUSTMENT EXAMPLE 52
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APPENDIX C - CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT AMOUNT 54
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STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 56
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2 PROSPECTUS
IMPORTANT TERMS
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This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
PAGE
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Accumulation Phase 7
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Accumulation Unit 14
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Accumulation Unit Value 14
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Anniversary Values 33
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Annuitant 12
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Automatic Additions Program 13
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Automatic Portfolio Rebalancing Program 24
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Beneficiary 12
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Cancellation Period 14
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Contingent Beneficiary 12
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*Contract 12
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Contract Anniversary 6
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Contract Owner ("You") 12
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Contract Value 6
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Contract Year 4
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Death Benefit Anniversary 32
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Dollar Cost Averaging Program 23
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Due Proof of Death 32
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Enhanced Earnings Death Benefit Rider 33
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Enhanced Death Benefit Rider 33
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Fixed Account Options 20
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Free Withdrawal Amount 25
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Funds 1
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Guarantee Periods 21
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Guaranteed Income Benefit 31
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PAGE
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Guaranteed Maturity Fixed Account 20
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Income Base 31
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Income Benefit Rider 30
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Income Plan 29
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In-Force Premium 34
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Investment Alternatives 16
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Issue Date 7
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Lincoln Benefit ("We" or "Us") 36
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Loan Account 28
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Market Value Adjustment 22
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Payout Phase 7
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Payout Start Date 29
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Portfolios 37
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Primary Beneficiary 12
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Rider Date 33
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SEC 1
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Settlement Value 32
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Systematic Withdrawal Program 27
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Tax Qualified Contracts 41
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Valuation Date 14
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Variable Account 37
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Variable Subaccount 16
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*In certain states the Contract is available only as a group Contract. If you
purchase a group Contract, we will issue you a certificate that represents
your ownership and that summarizes the provisions of the group Contract.
References to "Contract" in this prospectus include certificates, unless the
context requires otherwise.
3 PROSPECTUS
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contracts. Please read the remainder of this
prospectus for more information.
FLEXIBLE PAYMENTS You can purchase a Contract with as little as
$10,000. You can add to your Contract as often and as
much as you like, but each payment must be at least $100
unless you enroll in an automatic payment plan, in which
case each payment must be at least $50.
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RIGHT TO CANCEL You may cancel your Contract within 20 days of receipt
or any longer period as your state may require
("CANCELLATION PERIOD"). Upon cancellation, we will
return your purchase payments adjusted, to the extent
federal or state law permits, to reflect the investment
experience of any amounts allocated to the Variable
Account. If your Contract is qualified under Section
408 of the Internal Revenue Code, we will refund the
greater of any purchase payments or the Contract Value.
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EXPENSES You will bear the following expenses:
.Total Variable Account annual fees equal to 1.35% of
average daily net assets (1.60% if you select the
ENHANCED DEATH BENEFIT RIDER, 1.55% if you elect the
INCOME BENEFIT RIDER, and 1.80% if you select both the
Enhanced Death Benefit and the Income Benefit Riders).
.If you select the ENHANCED EARNINGS DEATH BENEFIT
RIDER, you would pay an additional annual fee of up to
0.35% of average daily net assets (depending on the
oldest Contract owner's age on the date we issue the
Rider). For more information about Variable Account
expenses, see "EXPENSES" below.
.Withdrawal charges ranging from 0% to 8% of purchase
payment withdrawn (with certain exceptions)
.Transfer fee of up to 0.50% of the transfer amount, but
not less than $25, after 12th transfer in any CONTRACT
YEAR (fee currently waived)
* State premium tax (if your state imposes one). In
addition, each Portfolio pays expenses that you will
bear indirectly if you invest in a Variable Subaccount.
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INVESTMENT The Contract offers 44 Investment Alternatives
ALTERNATIVES including:
.3 Fixed Account Options (which credit interest at
rates we guarantee)
.41Variable Subaccounts investing in Portfolios offering
professional money management by these investment
advisers:
. A I M Advisors, Inc.
. Deutsche Asset Management, Inc.
. Fred Alger Management, Inc.
. Fidelity Management & Research Company
. Janus Capital Management LLC
. Lazard Asset Management LLC
. LSA Asset Management LLC
. MFS Investment Management(R)
. OpCap Advisors
. OppenheimerFunds, Inc.
. Pacific Investment Management Company
. Putnam Investment Management, Inc.
. Rydex Global Advisers
. Salomon Brothers Asset Management Inc
. Van Kampen*
. Van Kampen Asset Management Inc.
To find out current rates being paid on the fixed
account options or how the Variable Subaccounts have
performed, call us at 1-800-865-5237.
*Morgan Stanley Invesement Management Inc., the
investment adviser to certain of the Portfolios, does
business in certain instances as Van Kampen.
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SPECIAL SERVICES For your convenience, we offer these special services:
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. AUTOMATIC ADDITIONS PROGRAM
. DOLLAR COST AVERAGING PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
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INCOME PAYMENTS You can choose fixed income payments, variable
income payments, or a combination of the two. You can
receive your income payments in one of the following
ways:
. life income with guaranteed payments
.a "joint and survivor" life income with guaranteed
payments
.guaranteed payments for a specified period (5 to 30
years)
We offer an optional Income Benefit Rider.
DEATH BENEFITS If you or the ANNUITANT (if the Contract Owner is a
non-living person) die before the PAYOUT START DATE, we
will pay the death benefit described in the Contract.
We offer an Enhanced Death Benefit Rider and Enhanced
Earnings Death Benefit Rider. The Enhanced Earnings
Death Benefit Rider is not available for purchase with
any IRA at this time.
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TRANSFERS Before the Payout Start Date, you may transfer your
Contract value ("CONTRACT VALUE") among the investment
alternatives, with certain restrictions. We do not
currently impose a fee upon transfers. However, we
reserve the right to charge up to 0.50% of the transfer
amount, but not less than $25 per transfer after the
12th transfer in each "Contract Year", which we measure
from the date we issue your Contract or a Contract
anniversary ("CONTRACT ANNIVERSARY"), which is the
anniversary of your Contract's Issue Date.
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WITHDRAWALS You may withdraw some or all of your Contract Value at
any time prior to the Payout Start Date. In general,
you must withdraw at least $50 at a time. Full or
partial withdrawals are available under limited
circumstances on or after the Payout Start Date.
Withdrawals of earnings are taxed as ordinary income
and, if taken prior to age 59 1/2, may be subject to an
additional 10% federal tax penalty. A withdrawal
charge and a MARKET VALUE ADJUSTMENT also may apply.
4 PROSPECTUS
HOW THE CONTRACT WORKS
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The Contract basically works in two ways.
First, the Contract can help you (we assume you are the CONTRACT OWNER) save for
retirement because you can invest in up to 44 investment alternatives and
generally pay no federal income taxes on any earnings until you withdraw them.
The income on qualified plan and IRA investments is tax deferred and variable
annuities held by such plans do not receive any additional tax deferral. See
"TAX QUALIFIED CONTRACTS" on page 41. You do this during what we call the
"ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date
we issue your Contract (we call that date the "ISSUE DATE") and continues until
the Payout Start Date, which is the date we apply your money to provide income
payments. During the Accumulation Phase, you may allocate your purchase payments
to any combination of the Variable Subaccounts and/or Fixed Account Options. If
you invest in any of the three Fixed Account Options, you will earn a fixed rate
of interest that we declare periodically. If you invest in any of the Variable
Subaccounts, your investment return will vary up or down depending on the
performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/ or for a pre-set number of years, by
selecting one of the income payment options (we call these "INCOME PLANS")
described on page 29. You receive income payments during what we call the
"PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and
continues until we make the last payment required by the Income Plan you select.
During the Payout Phase, if you select a fixed income payment option, we
guarantee the amount of your payments, which will remain fixed. If you select a
variable income payment option, based on one or more of the Variable
Subaccounts, the amount of your payments will vary up or down depending on the
performance of the corresponding Portfolios. The amount of money you accumulate
under your Contract during the Accumulation Phase and apply to an Income Plan
will determine the amount of your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
Issue Payout Start
Date Accumulation Phase Date Payout Phase
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You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if none, the
BENEFICIARY will exercise the rights and privileges provided by the Contract.
SEE"The Contract." In addition, if you die before the Payout Start Date, we will
pay a death benefit to any surviving Contract Owner, or if there is none, to
your Beneficiary. SEE "Death Benefits."
Please call us at 1-800-865-5237 if you have any questions about how the
Contract works.
7 PROSPECTUS
EXPENSE TABLE
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THE FOLLOWING TABLES LIST THE EXPENSES AND FEES THAT YOU WILL BEAR DIRECTLY OR
INDIRECTLY WHEN YOU BUY, OWN, OR SURRENDER A CONTRACT. THE FIRST TABLE DESCRIBES
THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT,
SURRENDER THE CONTRACT, OR TRANSFER CASH VALUE BETWEEN PORTFOLIOS. THE TABLES
AND THE EXAMPLES THAT FOLLOW DO NOT REFLECT PREMIUM TAXES THAT MAY BE IMPOSED BY
THE STATE WHERE YOU RESIDE. FOR MORE INFORMATION ABOUT VARIABLE ACCOUNT
EXPENSES, SEE "EXPENSES," BELOW. FOR MORE INFORMATION ABOUT PORTFOLIO EXPENSES,
PLEASE REFER TO THE ACCOMPANYING PROSPECTUSES FOR THE FUNDS.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
Number of Complete Years Since We Received the Purchase Payment Being Withdrawn:
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Contract: 0 1 2 3 4 5 6 7 8+
Applicable Charge: 8% 7% 7% 6% 6% 5% 4% 3% 0%
All Contracts:
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Transfer Fee up to 0.50% of the amount transferred**
*Each Contract Year, you may withdraw the greater of earnings not previously
withdrawn or 15% of your New Purchase Payments (as defined in "Withdrawal
Charge" below) without incurring a withdrawal charge. You may withdraw any
Purchase Payment made more than 8 years before the withdrawal, which have not
been previously withdrawn, without paying the charge.
**Applies solely to the thirteenth and subsequent transfers within a Contract
Year, excluding transfers due to dollar cost averaging and automatic
portfolio rebalancing. We are currently waiving the transfer fee.
THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING PORTFOLIO FEES AND
EXPENSES.
VARIABLE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSET VALUE DEDUCTED FROM EACH VARIABLE
SUBACCOUNT)
Mortality and Expense Risk Administrative Total Variable Account
Charge Expense Charge* Annual Expense
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Without the Enhanced
Death Benefit or Income 1.25% 0.10% 1.35%
Benefit Riders
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With the Enhanced Death 1.50% 0.10% 1.60%
Benefit Rider
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With the Income Benefit 1.45% 0.10% 1.55%
Rider
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With the Income Benefit
and Enhanced Death 1.70% 0.10% 1.80%
Benefit Riders
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If you elect the Enhanced Earnings Death Benefit Rider, your Total Variable
Account Annual Expenses will be increased, based on the oldest Contract
Owner's age on the date we issue the Rider, as follows:
Age Annual Charge
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0-55 0.15%
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56-65 0.25%
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66-75 0.35%
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THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY
THE PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE
CONTRACT. ADVISERS AND/OR OTHER SERVICE PROVIDERS OF CERTAIN PORTFOLIOS MAY HAVE
AGREED TO WAIVE THEIR FEES AND/OR REIMBURSE PORTFOLIO EXPENSES IN ORDER TO KEEP
THE PORTFOLIOS' EXPENSES BELOW SPECIFIED LIMITS. THE RANGE OF EXPENSES SHOWN IN
THIS TABLE DOES NOT SHOW THE EFFECT OF ANY SUCH FEE WAIVER OR EXPENSE
REIMBURSEMENT. MORE DETAIL CONCERNING EACH PORTFOLIO'S FEES AND EXPENSES APPEARS
IN THE PROSPECTUS FOR EACH PORTFOLIO.
8 PROSPECTUS
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
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Minimum Maximum
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Total Annual Portfolio Operating
Expenses/(1)/ (expenses that are
deducted from
Portfolio assets, including any
management fees, distribution
and/or service (12b-1) fees, 0.50% 7.61%
and other expenses)
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(1) EXPENSES ARE SHOWN AS A PERCENTAGE OF PORTFOLIO AVERAGE DAILY NET ASSETS,
BEFORE ANY WAIVER OR REIMBURSEMENT, AS OF DECEMBER 31, 2002.
EXAMPLES
EXAMPLE 1
This Example is intended to help you compare the cost of investing in the
Contracts with the cost of investing in other variable annuity contracts. These
costs include Contract owner transaction expenses, Contract fees, Variable
Account annual expenses, and Portfolio fees and expenses and assume no transfers
or exchanges were made. The Example shows the dollar amount of expenses that you
would bear directly or indirectly if you:
.. invested $10,000 in the Contract for the time periods indicated,
.. earned a 5% annual return on your investment, and
.. surrendered your Contract, or you began receiving income payments for a
specified period of less than 120 months, at the end of each time period, and
.. elected the Income Benefit, Enhanced Death Benefit, and Enhanced Earnings
Death Benefit Riders (assuming Contract Owner is age 66-75 on rider issue date
and with total Variable Account expenses of 2.15%.)
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO
PAY IF YOU SURRENDER YOUR CONTRACT.
The first line of the Example assumes that the maximum fees and expenses of any
of the Portfolios are charged. The second line of the Example assumes that the
minimum fees and expenses of any of the Portfolios are charged. Your actual
expenses may be higher or lower than those shown below.
1Year 3Years 5 Years 10 Years
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Costs Based on Maximum
Annual Portfolio $1,595 $3,363 $4,950 $8,026
Expenses
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Costs Based on Minimum
Annual Portfolio $ 867 $1,343 $1,846 $3,012
Expenses
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9 PROSPECTUS
EXAMPLE 2
This Example uses the same assumptions as Example 1 above, except that it
assumes you decided not to surrender your Contract, or you began receiving
income payments for a specified period of at least 120 months, at the end of
each time period.
1Year 3Years 5 Years 10 Years
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Costs Based on Maximum
Annual Portfolio $1,000 $2,853 $4,525 $8,026
Expenses
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Costs Based on Minimum
Annual Portfolio $ 272 $ 833 $1,421 $3,012
Expenses
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EXPLANATION OF EXPENSE EXAMPLES
PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF
PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%,
WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE
WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED.
EXAMPLES 1 AND 2 ASSUME THE ELECTION OF THE INCOME BENEFIT AND ENHANCED DEATH
BENEFIT RIDERS (TOTAL VARIABLE ACCOUNT EXPENSES OF 2.15%).IF THESE RIDERS WERE
NOT ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER.
The Examples reflect the Free Withdrawal Amounts, if applicable, and an annual
Contract maintenance charge of $30.
10 PROSPECTUS
FINANCIAL INFORMATION
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To measure the value of your investment in the Variable Subaccounts during the
Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT".
Each Variable Subaccount has a separate value for its Accumulation Units which
we call "ACCUMULATION UNIT VALUE." Accumulation Unit Value is analogous to, but
not the same as, the share price of a mutual fund.
Because we deduct Rider charges directly from the Variable Subaccounts, we
calculate separate Accumulation Unit Values for the base Contract and for
Contracts issued with various combinations of optional Riders.
Accumulation Unit Values for the lowest and highest charges available are shown
in Appendix A to this prospectus. The Statement of Additional Information
contains the Accumulation Unit Values for all other available combinations of
charges. Please contact us to obtain a copy of the Statement of Additional
Information.
To obtain a fuller picture of each Variable Subaccount's finances, please refer
to the Variable Account's financial statements contained in the Statement of
Additional Information. The financial statements of Lincoln Benefit also appear
in the Statement of Additional Information.
11 PROSPECTUS
THE CONTRACT
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CONTRACT OWNER
The LBL Advantage Variable Annuity is a contract between you, the Contract
Owner, and Lincoln Benefit, a life insurance company. As the Contract Owner, you
may exercise all of the rights and privileges provided to you by the Contract.
That means it is up to you to select or change (to the extent permitted):
.. the investment alternatives during the Accumulation and Payout Phases,
.. the amount and timing of your purchase payments and withdrawals,
.. the programs you want to use to invest or withdraw money,
.. the income payment plan you want to use to receive retirement income,
.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, and
.. any other rights that the Contract provides.
If you die, any surviving Contract Owner, or, if none, the Beneficiary, may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living
person. If the Contract Owner is a grantor trust, the Contract Owner will be
considered a non-living person for purposes of this section and the Death
Benefits section. The maximum age of the oldest Contract Owner and Annuitant
cannot exceed 90 as of the date we receive the completed application.
You may change the Contract Owner at any time. We will provide a change of
ownership form to be signed by you and filed with us. After we accept the form,
the change of ownership will be effective as of the date you signed the form.
Until we receive your written notice to change the Contract Owner, we are
entitled to rely on the most recent ownership information in our files. We will
not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change the Contract Owner, you
should deliver your written notice to us promptly. Each change is subject to any
payment made by us or any other action we take before we accept the change.
Changing ownership of this Contract may cause adverse tax consequences and may
not be allowed under qualified plans. Please consult with a competent tax
advisor prior to making a request for a change of Contract Owner. The Income
Benefit Rider and Enhanced Earnings Death Benefit Rider terminate upon changes
of the Annuitant.
You can use the Contract with or without a qualified plan. A qualified plan is a
personal retirement savings plan, such as an IRA or tax-sheltered annuity, that
meets the requirements of the Internal Revenue Code. Qualified plans may limit
or modify your rights and privileges under the Contract. Variable Annuities held
by Qualified Plans do not receive any additional tax deferral. We use the term
"Qualified Contract" to refer to a Contract issued within a qualified plan. See
"Qualified Plans" on page 38.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for a
specified period). You initially designate an Annuitant in your application. You
may change the Annuitant at any time prior to the Payout Start Date (only if the
Contract Owner is a living person). Once we accept a change, it takes effect as
of the date you signed the request. Each change is subject to any payment we
make or other action we take before we accept it.
If the Contract is a non-qualified Contract, you may designate a joint
Annuitant, who is a second person on whose life income payments depend. We
permit joint Annuitants only during the Payout Phase. If the Annuitant dies
prior to the Payout Start Date, the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner subject to the Death of Owner provision if the
sole surviving Contract owner dies before the Payout Start Date. If the sole
surviving Contract Owner dies after the Payout Start Date, the PRIMARY
BENEFICIARY, or if none surviving, the CONTINGENT BENEFICIARY, will receive any
guaranteed income payments scheduled to continue.
You may name one or more primary Beneficiaries when you apply for a Contract.
The primary Beneficiary is the person who may elect to receive the death benefit
or become the new Contract Owner if the sole surviving Contract Owner dies
before the Payout Start Date. You may also name one or more Contingent
Beneficiaries who will receive any Death Benefit or Guaranteed Income Benefit if
no Beneficiary survives the sole surviving Contract Owner.
You may change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed by you and filed with us. After we accept the form, the change of
Beneficiary will be effective as of the date you signed the form. Until we
receive your written notice to change a Beneficiary, we are entitled to rely on
the most recent
12 PROSPECTUS
Beneficiary information in our files. We will not be liable as to any payment or
settlement made prior to receiving the written notice. Accordingly, if you wish
to change your Beneficiary, you should deliver your written notice to us
promptly. Each change is subject to any payment made by us or any other action
we take before we accept the change.
Unless you have provided directions to the contrary, the Beneficiaries will take
equal shares. If there is more than one Beneficiary in a class and one of the
Beneficiaries predeceases the Contract Owner or Annuitant, the remaining
Beneficiaries in that class will divide the deceased Beneficiary's share in
proportion to the original shares of the remaining Beneficiaries.
If more than one Beneficiary shares in the Death Proceeds, each Beneficiary will
be treated as a separate and independent owner of his or her respective share.
Each Beneficiary will exercise all rights related to his or her share, including
the sole right to select a payout option, subject ot any restrictions previously
placed upon the Beneficiary. Each Beneficiary may designate a Beneficiary(ies)
for his or her respective share, but that designated Beneficiary(ies) will be
restricted to the payout option chosen by the original Beneficiary.
If there is more than one Beneficiary and one of the Beneficiaries is a
corporation or other type of non-living person, all beneficiaires will be
considered to be non-living persons.
You may specify that the Death Benefit be paid under a specific Income Plan by
submitting a written request to our Service Center. If you so request, your
Beneficiary may not change to a different Income Plan or lump sum. Once we
accept the written requst, the change or restriction wll take effect as of the
date you signed the request. Any change is subject to any payment we make or
other action we take before we accept the changes.
Different rules may apply to Contracts issued in connection with Qualified
Plans.
If you did not name a Beneficiary or, unless otherwise provided in the
Beneficiary designation, if a named Beneficiary is no longer living and there
are no other surviving Beneficiaries or Contingent Beneficiaries, the new
Beneficiary will be:
.. your spouse or, if he or she is no longer alive,
.. your surviving children equally, or if you have no surviving children,
.. your estate.
If one or more Beneficiaries survive you (or survives the Annuitant, if the
Contract Owner is not a living person), we will divide the death benefit among
the surviving Beneficiaries according to your most recent written instructions.
If you have not given us written instructions, we will pay the death benefit in
equal amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only a Lincoln Benefit officer may approve a change in or waive any provision of
the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. If a provision of the Contract
is inconsistent with state law, we will follow state law.
ASSIGNMENT
We will honor an assignment of an interest in a Contract as collateral or
security for a loan. No Beneficiary may assign benefits under the Contract until
they are payable to the Beneficiary. We will not be bound by any assignment
until the assignor signs it and files it with us. We are not responsible for the
validity of any assignment. Federal law prohibits or restricts the assignment of
benefits under many types of Qualified Plans and other types of retirement plans
and the terms of such plans may themselves contain restrictions on assignments.
An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT AN
ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
- --------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $10,000. All subsequent purchase
payments must be $100 or more unless part of an automatic additions program.
Each purchase payment made to the Dollar Cost Averaging Fixed Account must be at
least $1,200. If we receive purchase payments designated for the Dollar Cost
Averaging Fixed Account that are lower than the required minimum of $1,200, such
amounts will be allocated to the PIMCO Money Market Portfolio. You may make
purchase payments at any time prior to the Payout Start Date. We reserve the
right to limit the maximum amount of purchase payments we will accept. The most
we will accept without our prior approval is $1,000,000. We also reserve the
right to reject any application.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments of $50 or more by automatically
transferring money from your bank account. Consult your representative for more
detailed information.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to allocate your
purchase payments among the investment alternatives. The allocation you specify
on
13 PROSPECTUS
your application will be effective immediately. All allocations must be in whole
percents that total 100% or in whole dollars. You can change your allocations by
notifying us in writing.
We will allocate your purchase payments to the investment alternatives according
to your most recent instructions on file with us. Unless you notify us in
writing otherwise, we will allocate subsequent purchase payments according to
the allocation for the previous purchase payment. We will effect any change in
allocation instructions at the time we receive written notice of the change in
good order.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our home office. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
home office.
We are open for business each day Monday through Friday that the New York Stock
Exchange is open for business, except for certain days immediately preceding or
following certain national holidays when the New York Stock Exchange is open for
business. For calendar year 2002, our office will be closed on July 5th and
November 29th. Each day that the New York Stock Exchange is open for business is
referred to as a VALUATION DATE. We determine the number of Accumulation Units
for each Variable Subaccount to allocate to your contract by dividing that
portion of your Purchase Payment allocated to a Variable Subaccount by that
Variable Subaccount's Accumulation Unit Value on the Valuation Date when the
allocation occurs. Our business day closes when the New York Stock Exchange
closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your
purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit
your purchase payment using the Accumulation Unit Values computed on the next
Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 20 day period after you receive the Contract, or a longer
period should your state require it. You may return it by delivering it or
mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract
terminates and we will pay you the full amount of your purchase payments
allocated to the Fixed Account. We also will return your purchase payments
allocated to the Variable Account adjusted, to the extent federal or state law
permits, to reflect investment gain or loss that occurred from the date of
allocation through the date of cancellation. Some states may require us to
return a greater amount to you. If your Contract is qualified under Section 408
of the Internal Revenue Code, we will refund the greater of any purchase
payments or the Contract Value.
In states where we are required to refund purchase payments, we reserve the
right during the Cancellation Period to invest any purchase payments you
allocated to a Variable Subaccount to the Money Market Variable Subaccount
available under the Contract. We will notify you if we do so. At the end of the
Cancellation Period, we will allocate the amount in the Money Market Variable
Subaccount to the Variable Subaccount as you originally designated.
CONTRACT VALUE
- --------------------------------------------------------------------------------
Your Contract Value at any time during the Accumulation Phase is equal to the
sum of the value of your Accumulation Units in the Variable Subaccounts you have
selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Subaccount to
credit to your Contract, we divide (i) the amount of the purchase payment or
transfer you have allocated to a Variable Subaccount by (ii) the Accumulation
Unit Value of that Variable Subaccount next computed after we receive your
payment or transfer. For example, if we receive a $10,000 purchase payment
allocated to a Variable Subaccount when the Accumulation Unit Value for the
Subaccount is $10, we would credit 1,000 Accumulation Units of that Variable
Subaccount to your Contract. Withdrawals and transfers from a Variable
Subaccount would, of course, reduce the number of Accumulation Units of that
Subaccount allocated to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Subaccount
will rise or fall to reflect:
.. changes in the share price of the Portfolio in which the Variable Subaccount
invests, and
.. the deduction of amounts reflecting the mortality and expense risk charge
administrative expense charge, and any provision for taxes that have accrued
since we last calculated the Accumulation Unit Value.
We determine withdrawal charges, and transfer fees (currently waived) separately
for each Contract. They do not affect Accumulation Unit Value. Instead, we
obtain payment of those charges and fees by redeeming
14 PROSPECTUS
Accumulation Units. For details on how we calculate Accumulation Unit Value,
please refer to the Statement of Additional Information.
We determine a separate Accumulation Unit Value for each Variable Subaccount on
each Valuation Date. We also determine a separate set of Accumulation Unit
Values reflecting the cost of the Enhanced Death Benefit Rider, the Income
Benefit Rider, the Enhanced Death Benefit Rider with the Income Benefit Rider,
and the Enhanced Earnings Death Benefit Rider.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE FUNDS THAT ACCOMPANY THIS
PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED,
SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE
CORRESPONDING VARIABLE SUBACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
15 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUBACCOUNTS
- --------------------------------------------------------------------------------
You may allocate your purchase payments to up to 41Variable Subaccounts. Each
Variable Subaccount invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with the Portfolio, please refer to the accompanying prospectuses for
the Funds. You should carefully review the Fund prospectuses before allocating
amounts to the Variable Subaccounts.
PORTFOLIO PORTFOLIO OBJECTIVE INVESTMENT ADVISOR
AIM VARIABLE INSURANCE FUNDS
Dent Demographic Trends Long-term growth of A I M ADVISORS, INC.
Fund capital
THE ALGER AMERICAN FUND
- -------------------------------------------------------------------------------
Alger American Growth Long-term capital FRED ALGER MANAGEMENT,
Portfolio - Class S appreciation INC.
- -------------------------------------------------------------------------------
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
- -------------------------------------------------------------------------------
Equity-Income Portfolio - Reasonable income
Service Class 2
- -------------------------------------------------------
Investment Grade Bond As high a level of current FIDELITY MANAGEMENT &
Portfolio - Service income as is consistent RESEARCH COMPANY
Class 2 with the preservation of
capital
- -------------------------------------------------------
Overseas Portfolio - Long-term growth of
Service Class 2 capital.
- -------------------------------------------------------
Growth Portfolio - Capital appreciation
Service Class 2
- -------------------------------------------------------------------------------
JANUS ASPEN SERIES
- -------------------------------------------------------------------------------
International Value Long-term growth of
Portfolio: Service capital
Shares (fomerly Global JANUS CAPITAL MANAGEMENT
Value Portfolio) LLC
- -------------------------------------------------------
Worldwide Growth Long-term growth of
Portfolio: Service capital in a manner
Shares consistent with the
preservation of capital.
- -------------------------------------------------------------------------------
LAZARD RETIREMENT SERIES, INC.
- -------------------------------------------------------------------------------
Emerging Markets Long-term capital LAZARD ASSET MANAGEMENT
Portfolio appreciation LLC
- -------------------------------------------------------------------------------
LSA VARIABLE SERIES TRUST
- -------------------------------------------------------------------------------
Aggressive Growth Fund Long-term growth of
(1) capital by investing
primarily in equity
securities of small and
mid-sized growth
companies.
- -------------------------------------------------------
Balanced Fund (2) Seeks growth of capital,
with investment income as
a secondary objective, by
investing in a mix of
equity and debt
securities.
- -------------------------------------------------------
Basic Value Fund (3) Seeks long-term growth of
capital by investing
primarily in common
stocks which the Adviser
believes to be
undervalued in relation
to long-term earnings
power or other factors.
- -------------------------------------------------------
Blue Chip Fund (3) Seeks long-term growth of
capital, with current
income as a secondary
objective, by investing
primarily in equity
securities of blue chip
companies.
- -------------------------------------------------------
Capital Appreciation Fund Seeks long-term growth of LSA ASSET MANAGEMENT LLC
(4) capital by investing
primarily in equity
securities listed on
national exchanges or on
NASDAQ(R).
- -------------------------------------------------------
Diversified Mid Cap Fund Seeks long-term growth of
(5) capital by investing in
securities of companies
with medium market
capitalizations.
- -------------------------------------------------------
Emerging Growth Equity Seeks capital appreciation
Fund (6) by investing primarily in
rapidly growing emerging
companies.
- -------------------------------------------------------
Equity Growth Fund (7) Seeks long-term capital
(formerly Focused Equity appreciation by investing
Fund)* primarily in growth
oriented equity securitis
of large capitalization
companies.
- -------------------------------------------------------
Capital Growth Fund (8) Seeks long-term growth of (formerly Growth Equity
capital by investing in a Fund) diversified portfolio of
equity securities.
- -------------------------------------------------------
Mid Cap Value Fund (1) Seeks long-term growth of
capital by investing
primarily in equity
securities of companies
with medium market
capitalizations.
- -------------------------------------------------------
Value Equity Fund (6) Seeks long-term growth of
capital, with current
income as a secondary
objective, by investing
primarily in common
stocks of established
U.S. companies.
- -------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------
New Discovery Series - Capital appreciation MFS INVESTMENT
Service Class MANAGEMENT(R)
- -------------------------------------------------------
Utilities Series - Capital growth and current
Service Class income
- -------------------------------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- -------------------------------------------------------------------------------
Main Street Small Cap Capital appreciation OPPENHEIMER FUNDS, INC.
Fund/VA - Service Class
- -------------------------------------------------------------------------------
PANORAMA SERIES FUND, INC.
- -------------------------------------------------------------------------------
Oppenheimer International Capital appreciation OPPENHEIMER FUNDS, INC.
Growth Fund/VA - Service
Class
- -------------------------------------------------------------------------------
PIMCO ADVISERS VIT (FORMERLY OCC ACCUMULATION TRUST)
- -------------------------------------------------------------------------------
PEA Science and Capital appreciation OPCAP ADVISORS LLC
Technology Portfolio (9)
- -------------------------------------------------------
OpCap Small Cap Portfolio Capital appreciation
- -------------------------------------------------------------------------------
PIMCO VARIABLE INSURANCE TRUST
- -------------------------------------------------------------------------------
Foreign Bond Portfolio To maximize total return,
consistent with
preservation of capital
and prudent investment
management
- -------------------------------------------------------
Money Market Portfolio To obtain maximum current
income consistent with
preservation of capital PACIFIC INVESTMENT
and daily liquidity. MANAGEMENT COMPANY LLC
- -------------------------------------------------------
Total Return Portfolio To maximize total return,
consistent with preservation
of capital and prudent
investment management.
- -------------------------------------------------------
Real Return Portfolio - Seeks maximum real return,
Administrative Shares consistent with
preservation of real
capital and prudent
investment management.
- -------------------------------------------------------------------------------
PUTNAM VARIABLE TRUST
- -------------------------------------------------------------------------------
High Yield Fund High current income.
Capital growth is a
secondary goal when
consistent with achieving
high current income. The
fund seeks its goal by
investing at least 80% in PUTNAM INVESTMENT
U.S. corporate rated MANAGEMENT, INC.
below investment grade
(junk bonds) and that
have intermediate to
long-term maturities
(three years or longer.)
- -------------------------------------------------------
International Growth and Capital growth. Current
Income Fund income is a secondary
objective.
- -------------------------------------------------------------------------------
RYDEX VARIABLE TRUST
- -------------------------------------------------------------------------------
OTC Fund Investment results that
correspond to a benchmark
for over-the-counter
securities. The RYDEX GLOBAL ADVISERS
Portfolio's current
benchmark is the NASDAQ
100 Index.
- -------------------------------------------------------
Sector Rotation Fund Long-term capital
appraciation.
- -------------------------------------------------------------------------------
SALOMON BROTHERS VARIABLE SERIES FUNDS INC
- -------------------------------------------------------------------------------
All Cap Fund (formerly Capital appreciation SALOMON BROTHERS ASSET
Capital Fund) MANAGEMENT INC
- -------------------------------------------------------------------------------
SCUDDER VARIABLE TRUST
- -------------------------------------------------------------------------------
EAFE Equity Index Fund - Capital appreciation by
Class B replicating, before
deduction of expenses,
performance of the EAFE
Index.
- -------------------------------------------------------
Equity 500 Index Fund - Capital appreciation by DEUTSCHE ASSET
Class B replicating, before MANAGEMENT, INC.
deduction of expenses,
performance of the S&P
500 Index.
- -------------------------------------------------------
Small Cap Index Fund - Capital appreciation by
Class B replicating, before
deduction of expenses,
the performance of the
Russell 2000 Index.
- -------------------------------------------------------------------------------
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
- -------------------------------------------------------------------------------
High Yield Portfolio - Above-average total return
Class I over a market cycle of
three to five years by VAN KAMPEN**
investing primarily in
high yield securities (commonly
referred to as "junk bonds").
- -------------------------------------------------------------------------------
VAN KAMPEN LIFE INVESTMENT TRUST
- -------------------------------------------------------------------------------
Growth & Income Long-term growth of
Portfolio, Class II capital and income VAN KAMPEN ASSET
- -------------------------------------------------------MANAGEMENT INC.
U.S. Real Estate Above-average current
Portfolio, Class II income and long-term
capital appreciation.
- -------------------------------------------------------------------------------
16 PROSPECTUS
*Effective May 1, 2003 the Disciplined Equity Fund merged into the Focused
Equity Fund and the Focused Equity Fund changed its name to the Equity Growth
Fund.
**Morgan Stanley Investment Management Inc., the investment adviser to the Van
Kampen UIF Portfolios, does business in certain instances as Van Kampen.
18 PROSPECTUS
(1) Sub-advised by Van Kampen Asset Management Inc.
(2) Sub-advised by OpCap Advisors.
(3) Sub-advised by A I M Capital Management, Inc.
(4) Sub-advised by Janus Capital Corp.
(5) Sub-advised by Fidelity Management & Research Company.
(6) Sub-advised by RS Investment Management, L.P.
(7) Sub-advised by Van Kampen.
(8) Sub-advised by Goldman Sachs Asset Management.
(9) Sub-advised by PIMCO Equity Advisors, L.L.C.
SOME OF THE PORTFOLIOS HAVE NAMES SIMILAR TO RETAIL MUTUAL FUNDS. HOWEVER, THE
PORTFOLIOS MAY BE MANAGED BY A DIFFERENT PORTFOLIO MANAGER. MOREOVER, THE
PORTFOLIOS ARE LIKELY TO DIFFER FROM RETAIL MUTUAL FUNDS IN ASSETS, CASH FLOW,
AND TAX MATTERS. ACCORDINGLY, A PORTFOLIO'S SECURITY HOLDINGS MAY DIFFER FROM
THOSE OF A SIMILARLY NAMED RETAIL MUTUAL FUND, AND INVESTMENT RESULTS OF A
PORTFOLIO CAN BE EXPECTED TO BE HIGHER OR LOWER THAN THE INVESTMENT RESULTS OF
SIMILARLY NAMED RETAIL MUTUAL FUNDS.
19 PROSPECTUS
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
You may allocate all or a portion of your purchase payments to the Fixed
Account. You may choose from among 3 Fixed Account Options, including 2 dollar
cost averaging options and the option to invest in one or more GUARANTEE PERIODS
included in the GUARANTEED MATURITY FIXED ACCOUNT. We may offer additional Fixed
Account options in the future. We will credit a minimum annual interest rate of
3% to money you allocate to any of the Dollar Cost Averaging Fixed Account
Options. The Fixed Account Options may not be available in all states. Please
consult with your representative for current information. The Fixed Account
supports our insurance and annuity obligations. The Fixed Account consists of
our general account assets other than those in segregated asset accounts. We
have sole discretion to invest the assets of the Fixed Account, subject to
applicable law. Any money you allocate to a Fixed Account Option does not
entitle you to share in the investment experience of the Fixed Account. Loan
Payments may not be allocated to the Fixed Account(s).
DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS
SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may establish a Short
Term Dollar Cost Averaging Program by allocating purchase payments to THE SHORT
TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION ("SHORT TERM DCA FIXED ACCOUNT
OPTION"). Each purchase payment allocated to the Short Term DCA Fixed Account
Option must be at least $1,000. We will credit interest to purchase payments you
allocate to this Option for up to six months at the current rate in effect at
the time of allocation. We will credit interest daily at a rate that will
compound at the annual interest rate we guaranteed at the time of allocation.
We will follow your instructions in transferring amounts monthly from the Short
Term DCA Fixed Account Option. However, you may not choose less than 3 or more
than 6 equal monthly installments. Further, you must transfer each purchase
payment and all its earnings out of this Option by means of dollar cost
averaging within 6 months. If you discontinue the Dollar Cost Averaging Program
before the end of the transfer period, we will transfer the remaining balance in
this Option to the Money Market Variable Subaccount unless you request a
different investment alternative. At the end of the transfer period, any
residual amount will be transferred to the Money Market Variable Subaccount. No
transfers are permitted into the Short Term DCA Fixed Account.
For each purchase payment allocated to this Option, your first monthly transfer
will occur 30 days after such purchase payment. If we do not receive an
allocation from you within 30 days of the date of payment, we will transfer the
payment plus associated interest to the Money Market Variable Subaccount in
equal monthly installments.
EXTENDED SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may
establish an Extended Short Term Dollar Cost Averaging Program by allocating
purchase payments to THE EXTENDED SHORT TERM DOLLAR COST AVERAGING FIXED ACCOUNT
OPTION ("EXTENDED SHORT TERM DCA FIXED ACCOUNT OPTION"). Each purchase payment
allocated to the Extended Short Term DCA Fixed Account Option must be at least
$1,000. We will credit interest to purchase payments you allocate to this Option
for up to twelve months at the current rate in effect at the time of allocation.
We will credit interest daily at a rate that will compound at the annual
interest rate we guaranteed at the time of allocation.
We will follow your instructions in transferring amounts monthly from the
Extended Short Term DCA Fixed Account Option. However, you may not choose less
than 7 or more than 12 equal monthly installments. Further, you must transfer
each purchase payment and all its earnings out of this Option by means of dollar
cost averaging within 12 months. If you discontinue the Dollar Cost Averaging
Program before the end of the transfer period, we will transfer the remaining
balance in this Option to the Money Market Variable Subaccount unless you
request a different investment alternative. At the end of the transfer period,
any residual amount will be transferred to the Money Market Variable Subaccount.
No transfers are permitted into the Extended Short Term DCA Fixed Account.
For each purchase payment allocated to this Option, your first monthly transfer
will occur 30 days after such purchase payment. If we do not receive an
allocation from you within 30 days of the date of payment, we will transfer the
payment plus associated interest to the Money Market Variable Subaccount in
equal monthly installments.
INVESTMENT RISK
We bear the investment risk for all amounts allocated to the Short Term DCA
Fixed Account Option and the Extended Short Term DCA Fixed Account Option. That
is because we guarantee the current rates we credit to the amounts you allocate
to either of these Options, which will never be less than the minimum guaranteed
rate in the Contract. We determine, in our sole discretion, the amount of
interest credited in excess of the guaranteed rate.
We may declare more than one interest rate for different monies based upon the
date of allocation to the Short Term DCA Fixed Account Option and the Extended
Short Term DCA Fixed Account Option. For current interest rate information,
please contact your representative or our customer support unit at
1-800-865-5237.
20 PROSPECTUS
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years. We are currently offering Guarantee Periods of 1, 3,
5, 7, and 10 years in length. In the future we may offer Guarantee Periods of
different lengths or stop offering some Guarantee Periods.
You select the Guarantee Period for each payment or transfer. If you do not
select a Guarantee Period, we will assign the same period(s) you selected for
your most recent purchase payment(s).
Each payment or transfer allocated to a Guarantee Period must be at least $500.
We reserve the right to limit the number of additional purchase payments that
you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we
are offering at a particular time. We will not change the interest rate that we
credit to a particular allocation until the end of the relevant Guarantee
Period. We may declare different interest rates for Guarantee Periods of the
same length that begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, our sales commission and administrative
expenses, general economic trends, and competitive factors. WE DETERMINE THE
INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR
GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate
information, please contact your representative or Lincoln Benefit at
1-800-865-5237.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated
to a Guarantee Period at a rate that compounds to the annual interest rate that
we declared at the beginning of the applicable Guarantee Period. The following
example illustrates how a purchase payment allocated to a Guaranteed Period
would grow, given an assumed Guarantee Period and annual interest rate:
Purchase Payment......................... $10,000
Guarantee Period......................... 5 years
Annual Interest Rate..................... 4.50%
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value................
x (1 + Annual $10,000.00
Interest Rate) 1.045
----------
$10,450.00
Contract Value at end
of Contract Year.....
x (1 + Annual $10,450.00
Interest Rate) 1.045
----------
$10,920.25
Contract Value at end
of Contract Year.....
x (1 + Annual $10,920.25
Interest Rate) 1.045
----------
$11,411.66
Contract Value at end
of Contract Year.....
x (1 + Annual $11,411.66
Interest Rate) 1.045
----------
$11,925.19
Contract Value at end
of Contract Year.....
x (1 + Annual $11,925.19
Interest Rate) 1.045
-----------
$12,461.82
TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82 -
$10,000.00)
This example assumes no withdrawals during the entire 5-year Guarantee Period.
If you were to make a withdrawal, you may be required to pay a withdrawal
charge. In addition, the amount withdrawn may be increased or decreased by a
Market Value Adjustment that reflects changes in interest rates since the
time you invested the amount withdrawn. The hypothetical interest rate is for
illustrative purposes only and is not intended to predict future interest
rates to be declared under the Contract. Actual interest rates declared for
any given Guarantee Period may be more or less than shown above.
RENEWALS. Prior to the end of each Guarantee Period, we will mail you a notice
asking you what to do with your money, including the accrued interest. During
the 30-day period after the end of the Guarantee Period, you may:
21 PROSPECTUS
1. Take no action. We will automatically apply your money to a new Guarantee
Period of the same length as the expiring Guarantee Period. The new Guarantee
Period will begin on the day the previous Guarantee Period ends. The new
interest rate will be our current declared rate for a Guarantee Period of that
length; or
2. Instruct us to apply your money to one or more new Guarantee Periods of your
choice. The new Guarantee Period(s) will begin on the day the previous Guarantee
Period ends. The new interest rate will be our then current declared rate for
those Guarantee Periods; or
3. Instruct us to transfer all or a portion of your money to one or more
Variable Subaccounts of the Variable Account. We will effect the transfer on the
day we receive your instructions. We will not adjust the amount transferred to
include a Market Value Adjustment; or
4. Withdraw all or a portion of your money. You may be required to pay a
withdrawal charge, but we will not adjust the amount withdrawn to include a
Market Value Adjustment. You may also be required to pay premium taxes and
income tax withholding, if applicable. We will pay interest from the day the
Guarantee Period expired until the date of withdrawal. The interest will be the
rate for the shortest Guarantee Period then being offered. Amounts not withdrawn
will be applied to a new Guarantee Period of the same length as the previous
Guarantee Period. The new Guarantee Period will begin on the day the previous
Guarantee Period ends.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period,
other than those taken during the 30-day period after such Guarantee Period
expires, are subject to a Market Value Adjustment. A Market Value Adjustment
also may apply upon payment of a death benefit and when you apply amounts
currently invested in a Guarantee Period to an Income Plan (unless paid or
applied during the 30-day period after such Guarantee Period expires). We also
will not apply a Market Value Adjustment to a withdrawal you make:
.. that qualifies for one of the waivers as described on pages 25-26,
.. to satisfy the IRS minimum distribution rules for the Contract, or
.. a single withdrawal made by a surviving spouse made within one year after
continuing the Contract.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the TREASURY RATE for a maturity equal to the Guarantee Period at its
inception to the Treasury Rate for a maturity equal to the Guarantee Period when
you remove your money. "Treasury Rate" means the U.S. Treasury Note Constant
Maturity Yield as reported in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly, the Market Value
Adjustment and any withdrawal charge, premium taxes, and income tax withholding
(if applicable) could reduce the amount you receive upon full withdrawal from a
Guaranteed Period to an amount that is less than the purchase payment applied to
that period plus interest earned under the Contract.
Generally, if the original Treasury Rate at the time you allocate money to a
Guarantee Period is higher than the applicable current Treasury Rate for a
period equal to the Guarantee Period, then the Market Value Adjustment will
result in a higher amount payable to you, transferred or applied to an Income
Plan. Conversely, if the Treasury Rate at the time you allocate money to a
Guarantee Period is lower than the applicable Treasury Rate for a period equal
to the Guarantee Period, then the Market Value Adjustment will result in a lower
amount payable to you, transferred or applied to an Income Plan.
For example, assume that you purchase a Contract and you select an initial
Guarantee Period of 5 years and the 5-year Treasury Rate for that duration is
4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at
that later time, the current 5-year Treasury Rate is 4.20%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current 5-year Treasury Rate is 4.80%,
then the Market Value Adjustment will be negative, which will result in a
decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
22 PROSPECTUS
INVESTMENT ALTERNATIVES: TRANFERS
- --------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives. You may not transfer Contract Value to either the Short
Term Dollar Cost Averaging Fixed Account or the Extended Short Term Dollar Cost
Averaging Fixed Account Options. You may request transfers in writing on a form
that we provided or by telephone according to the procedure described below. The
minimum amount that you may transfer into a Guarantee Period is $500. We
currently do not assess, but reserve the right to assess, a charge of.50% of the
transfer amount but not less than $25, on each transfer in excess of 12 per
Contract Year. All transfers to or from more than one Portfolio on any given day
counts as one transfer.
As a general rule, we only make transfers on days when we and the NYSE are open
for business. If we receive your request on one of those days, we will make the
transfer that day. The Contract permits us to defer transfers from the Fixed
Account for up to six months from the date we receive your request. If we decide
to postpone transfers for 30 days or more, we will pay interest as required by
applicable law. Any interest would be payable from the date we receive the
transfer request to the date we make the transfer.
If you transfer an amount from a Guarantee Period other than during the 30-day
period after such Guarantee Period expires, we will increase or decrease the
amount by a Market Value Adjustment.
We reserve the right to waive any transfer restrictions.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Subaccounts
so as to change the relative weighting of the Variable Subaccounts on which your
variable income payments will be based. You may make up to 12 transfers per
Contract Year. You may not convert any portion of your fixed income payments
into variable income payments. After 6 months from the Payout Start Date, you
may make transfers from the Variable Subaccounts to increase the proportion of
your income payments consisting of fixed income payments.
TELEPHONE TRANSFERS
You may make transfers by telephone. To give a third party authorization, you
must first send us a completed authorization form. The cut off time for
telephone transfer requests is 3:00 p.m. Central Time. Calls completed before
3:00 p.m. will be effected on that day at that day's price. Calls completed
after 3:00 p.m. will be effected on the next day on which we and the NYSE are
open for business, at that day's price.
At any time, without notice, we may suspend, modify or terminate your privilege
to make transfers via the telephone, or via other electronic or automated means
previously approved by the Company, including, but not limited to, automated
telephone services, facsimile machine, e-mail and electronic services via online
access. Among other things, we reserve the right to limit the number of such
transfers among the Variable Subaccounts in any Contract year, or to refuse any
Variable Subaccount transfer request. We also reserve the right to restrict such
transfers in any manner reasonably designed to prevent transfers that we
consider disadvantageous to other Contract owners.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
EXCESSIVE TRADING LIMITS
We reserve the right to limit transfers among the Investment Alternatives in any
Contract Year, or to refuse any Investment Alternative transfer request, if:
.. we believe, in our sole discretion, that certain trading practices, such as
excessive trading or market timing ("Prohibited Trading Practices"), by, or on
behalf of, one or more Contract Owners, or a specific transfer request or
group of transfer requests, may have a detrimental effect on the Accumulation
Unit Values of any Variable Subaccount or the share prices of the
corresponding Funds or would be to the disadvantage of other Contract Owners;
or
.. we are informed by one or more of the corresponding Funds that they intend to
restrict the purchase of Fund shares because of Prohibited Trading Practices
or because they believe that a specific transfer or groups of transfers would
have a detrimental effect on the prices of Fund shares.
We may apply the restrictions in any manner reasonably designed to prevent
transfers that we consider disadvantageous to other Contract Owners.
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a
fixed dollar amount every month from any Variable Subaccount, the Short Term
Dollar Cost Averaging Fixed Account, or the Extended Short Term Dollar Cost
Averaging Fixed Account, to any of the other Variable Subaccounts. You may not
use the Dollar Cost Averaging Program to transfer amounts to or from the
Guarantee Periods. This program is available only during the Accumulation Phase.
23 PROSPECTUS
We will not charge a transfer fee for transfers made under this Program, nor
will such transfers count against the 12 transfers you can make each Contract
Year without paying a transfer fee.
The theory of Dollar Cost Averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this Program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market. You may not use Dollar Cost Averaging and Portfolio
Rebalancing at the same time. Call or write us for instructions on how to
enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Subaccounts, the
performance of each Subaccount may cause a shift in the percentage you allocated
to each Subaccount. If you select our Automatic Portfolio Rebalancing Program,
we will automatically rebalance the Contract Value in each Variable Subaccount
and return it to the desired percentage allocations. We will not include money
you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing
Program.
We will rebalance your account monthly, quarterly, semi-annually, or annually,
depending on your instructions. We will transfer amounts among the Variable
Subaccounts to achieve the percentage allocations you specify. You can change
your allocations at any time by contacting us in writing or by telephone. The
new allocation will be effective with the first rebalancing that occurs after we
receive your request. We are not responsible for rebalancing that occurs prior
to receipt of your request.
Example:
Assume that you want your initial purchase payment split among 2 Variable
Subaccounts. You want 40% to be in the LSA Growth Equity Variable Subaccount
and 60% to be in the LSA Balanced Variable Subaccount. Over the next 2 months
the bond market does very well while the stock market performs poorly. At the
end of the first quarter, the LSA Growth Equity Variable Subaccount now
represents 50% of your holdings because of its increase in value. If you
choose to have your holdings rebalanced quarterly, on the first day of the
next quarter, we would sell some of your units in the LSA Growth Equity
Variable Subaccount and use the money to buy more units in the LSA Balanced
Variable Subaccount so that the percentage allocations would again be 40% and
60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the
Accumulation Phase. The transfers made under the Program do not count towards
the 12 transfers you can make without paying a transfer fee, and are not subject
to a transfer fee. We will automatically terminate this program if you request
any transfer outside the Automatic Portfolio Rebalancing Program. Portfolio
rebalancing is consistent with maintaining your allocation of investments among
market segments, although it is accomplished by reducing your Contract Value
allocated to the better performing segments. You may not use Dollar Cost
Averaging and Portfolio Rebalancing at the same time.
EXPENSES
- --------------------------------------------------------------------------------
As a Contract Owner, you will bear, directly or indirectly, the charges and
expenses described below.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.25%
of the average daily net assets you have invested in the Variable Subaccounts
(1.50% if you select the Enhanced Death Benefit Rider; 1.45% if you select the
Income Benefit Rider; and 1.70% if you select both the Enhanced Death Benefit
Rider and the Income Benefit Rider), and an additional charge ranging from 0.15%
to 0.35% for the Enhanced Earnings Death Benefit described below.
The mortality and expense risk charge is for the insurance benefits available
with your Contract (including our guarantee of annuity rates and the death
benefits), for certain expenses of the Contract, and for assuming the risk
(expense risk) that the current charges will be sufficient in the future to
cover the cost of administering the Contract. If the charges under the Contract
are not sufficient, then we will bear the loss. We charge an additional amount
for the Enhanced Death Benefit Rider, the Income Benefit Rider and the Enhanced
Earnings Death Benefit Rider compensate us for the additional risk that we
accept by providing these Riders.
We guarantee that we will not raise the mortality and expense risk charge. We
assess the mortality and expense risk charge during both the Accumulation Phase
and the Payout Phase. After the Payout Start Date, mortality and expense risk
charges for the Enhanced Death Benefit, the Income Benefit, and the Enhanced
Earnings Death Benefit will cease.
ENHANCED EARNINGS DEATH BENEFIT RIDER CHARGE
If you elect the Enhanced Earnings Death Benefit Rider, we will increase the
Mortality and Expense charge during the Accumulation Phase by the annual rates
shown below based on the oldest Contract Owner's age on the Rider Date.
24 PROSPECTUS
AGE ANNUAL CHARGE
- -------------- ---------------------
0-55 0.15%
56-65 0.25%
66-75
0.35%
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of
the average daily net assets you have invested in the Variable Subaccounts. We
intend this charge to cover actual administrative expenses that exceed the
revenues from the contract maintenance charge. There is no necessary
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributed to that Contract. We
assess this charge each day during the Accumulation Phase and the Payout Phase.
We guarantee that we will not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment
alternatives. However, we reserve the right to charge up to 0.50% of the
transfer amount, but not less than $25, per transfer after the 12th transfer in
each Contract Year. We will not charge a transfer fee on transfers that are part
of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 8% of the purchase payment(s) you
withdraw. The charge declines to 0% over an 8 year period that begins on the day
we receive your payment. A schedule showing how the charge declines is shown on
page 8. Beginning on January 1, 2004, if you make a withdrawal before the Payout
Start Date, we will apply the withdrawal charge percentage in effect on the date
of the withdrawal, or the withdrawal charge penalty in effect on the following
day, whichever is lower. Any Purchase Payments older than 8 years old, which
have not been previously withdrawn, may be withdrawn without paying the
withdrawal charge. During each Contract year, you can also withdraw the greater
of earnings not previously withdrawn or 15% of your New Purchase Payments
without paying the charge. New Purchase Payments are Purchase Payments received
by us less than 8 years prior to withdrawal. Unused portions of this "FREE
WITHDRAWAL AMOUNT" are not carried forward to future Contract Years. We will
deduct withdrawal charges, if applicable, from the amount paid.
For purposes of calculating the withdrawal charge, the Contract Value is deemed
to be withdrawn in the following order:
FIRST. Earnings - The amount of Contract Value in excess of all purchase
payments that have not previously been withdrawn;
SECOND. Old Purchase Payments - Purchase payments received by us more than eight
years prior to the date of withdrawal which have not been previously withdrawn;
THIRD. New Purchase Payments that are not subject to a withdrawal charge; and
FOURTH. New Purchase Payments that are subject to a withdrawal charge.
For federal income tax purposes, withdrawals are considered to have come first
from earnings, which means you pay taxes on the earnings portion of your
withdrawal. Free withdrawal amounts are not cumulative.
We do not apply a withdrawal charge in the following situations:
.. on the Payout Start Date (a withdrawal charge may apply if you terminate
income payments to be received for a specified period);
.. withdrawals taken to satisfy IRS minimum distribution rules for the Contract;
or
.. withdrawals that qualify for one of the waivers as described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts. To the extent that the withdrawal charge does not cover all sales
commissions and other promotional or distribution expenses, we may use any of
our corporate assets, including potential profit which may arise from the
mortality and expense risk charge or any other charges or fee described above,
to make up any difference.
Withdrawals also may be subject to tax penalties or income tax and a Market
Value Adjustment. Withdrawals of earnings are taxed as ordinary income and, if
taken prior to age 59 1/2, may be subject to an additional 10% federal tax
penalty. You should consult your own tax counsel or other tax advisers regarding
any withdrawals.
CONFINEMENT WAIVER.We will waive the withdrawal charge and any Market Value
Adjustment on all withdrawals taken prior to the Payout Start Date under your
Contract if the following conditions are satisfied:
1. You or the Annuitant, if the Contract Owner is not a living person, are
confined to a long term care facility or a hospital for at least 90 consecutive
days. You or the Annuitant must enter the long term care facility or hospital at
least 30 days after the Issue Date;
2. You request the withdrawal and provide written proof of the stay no later
than 90 days following the end of your or the Annuitant's stay at the long term
care facility or hospital; and
3. A physician must have prescribed the stay and the stay must be medically
necessary (as defined in the Contract).
You may not claim this benefit if you, the Annuitant, or a member of your or the
Annuitant's immediate family, is
25 PROSPECTUS
the physician prescribing your or the Annuitant's stay in a long term care
facility.
TERMINAL ILLNESS WAIVER. We will waive the withdrawal charge and any Market
Value Adjustment on all withdrawals taken prior to the Payout Start Date under
your Contract if:
1. you or the Annuitant (if the Contract Owner is not a living person) are first
diagnosed with a terminal illness at least 30 days after the Issue Date; and
2. you claim this benefit and deliver adequate proof of diagnosis to us.
UNEMPLOYMENT WAIVER. We will waive the withdrawal charge and any Market Value
Adjustment on one partial or a full withdrawal taken prior to the Payout Start
Date under your Contract, if you meet the following requirements:
1. you or the Annuitant, if the Contract Owner is not a living person, become
unemployed at least one year after the Issue Date;
2. you or the Annuitant, if the Contract Owner is not a living person, receive
unemployment compensation as defined in the Contract for at least 30 days as a
result of that unemployment; and
3. you or the Annuitant, if the Contract Owner is not a living person, claim
this benefit within 180 days of your or the Annuitant's initial receipt of
unemployment compensation.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waivers. You should
consult your Contract for further details on these variations. Also, even if you
do not need to pay our withdrawal charge or a Market Value Adjustment because of
these waivers, you still may be required to pay taxes or tax penalties on the
amount withdrawn. You should consult your tax adviser to determine the effect of
a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
At our discretion, we may discontinue this practice and deduct premium taxes
from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, if applicable, we deduct the charge for premium taxes
from each investment alternative in the proportion that the Contract Owner's
value in the investment alternative bears to the total Contract Value.
DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however,
we may establish a provision for taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any taxes we incur as a result of the operation of the
Variable Account, whether or not we previously made a provision for taxes and
whether or not it was sufficient. Our status under the Internal Revenue Code is
briefly described in the Statement of Additional Information.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Subaccounts. These fees and expenses are described in the
accompanying prospectuses for the Funds. For a summary of current estimates of
those charges and expenses, see page 9. We may receive compensation from the
investment advisers or administrators of the Portfolios in connection with the
administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date.
The amount payable upon withdrawal is the Contract Value (or portion thereof)
next computed after we receive the request for a withdrawal at our home office,
adjusted by any Market Value Adjustment less any withdrawal charges, income tax
withholding, and any premium taxes. We will pay withdrawals from the Variable
Account within 7 days of receipt of the request, subject to postponement in
certain circumstances.
You can withdraw money from the Variable Account or the Fixed Account Options.
To complete a partial withdrawal from the Variable Account, we will cancel
Accumulation Units in an amount equal to the withdrawal and any applicable
withdrawal charge and premium taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is specified, we will deduct your withdrawal pro-rata from
the Variable Subaccounts according to the value of your investments therein.
26 PROSPECTUS
In general, you must withdraw at least $50 at a time. You also may withdraw a
lesser amount if you are withdrawing your entire investment in a Variable
Subaccount.
If you request a total withdrawal, we may require you to return your Contract to
us. Withdrawals of earnings are taxed as ordinary income and, if taken prior to
age 59/1/2/, may be subject to an additional 10% federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options
for up to 6 months (or shorter period if required by law). If we delay payment
for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
If your Contract is a non-qualified contract or IRA, you may choose to receive
systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual
basis at any time prior to the Payout Start Date. The minimum amount of each
systematic withdrawal is $50. Systematic withdrawals will be deducted from the
Variable Subaccounts and Fixed Account balances, excluding the Dollar Cost
Averaging Fixed Account Options, on a pro rata basis. At our discretion,
systematic withdrawals may not be offered in conjunction with the Dollar Cost
Averaging Program or Automatic Portfolio Rebalancing Program.
Depending on fluctuations in the value of the Variable Subaccounts and the value
of the Fixed Account Options, systematic withdrawals may reduce or even exhaust
the Contract Value. For income tax purposes, withdrawals are generally made from
earnings first. Withdrawals of earnings are taxed as ordinary income and, if
taken prior to age 59 1/2, may be subject to an additional 10% federal tax
penalty. Please consult your tax advisor before taking any withdrawal.
We will make systematic withdrawal payments to you or your designated payee. At
our discretion, we may modify or suspend the Systematic Withdrawal Program and
charge a processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to
less than $2,000, we may treat it as a request to withdraw your entire Contract
Value. Your Contract will terminate if you withdraw all of your Contract Value.
We will, however, ask you to confirm your withdrawal request before terminating
your Contract. Before terminating any Contract whose value has been reduced by
withdrawals to less than $2,000, we will inform you in writing of our intention
to terminate your Contract and give you at least 30 days in which to make an
additional Purchase Payment to restore your Contract Value to the contractual
minimum of $2,000. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges and applicable taxes.
27 PROSPECTUS
CONTRACT LOANS FOR 401(A) AND 403(B) CONTRACTS
- --------------------------------------------------------------------------------
Subject to the restrictions described below, we will make loans to the Contract
Owner of a Contract used in connection with a Tax Sheltered Annuity Plan ("TSA
Plan") under Section 403(b) of the Internal Revenue Code, or a Contract
purchased by a defined contribution plan qualified under Section 401(a) of the
Internal Revenue Code (a "401 Plan"), and issued under our prototype plan
document. If the Contract is owned by a 401 plan that is not issued under our
prototype, you should contact the plan trustee to determine the availability of
loans under the 401 plan. Such loans are not available in Vermont. Loans are not
available under non-qualified Contracts. We will only make loans after the right
to cancel period and before the Payout Start Date. All loans are subject to the
terms of the Contract, the relevant qualified plan, and the Internal Revenue
Code, which impose restrictions on loans.
We will not make a loan to you if the total of the requested loan and your
unpaid outstanding loans will be greater than the amount available for full
withdrawal under your Contract on the date of the loan. In addition, you may not
borrow a loan if the total of the requested loan and all of your loans under TSA
plans and 401 plans is more than the lesser of (a) or (b) where:
(a) equals $50,000 minus the excess of the highest outstanding loan balance
during the prior 12 months over the current outstanding loan balance; and
(b) equals the greater of $10,000 or half of the amount available for full
withdrawal.
The minimum loan amount is $1,000.
To request a Contract loan, write to us at the address given on the first page
of the prospectus. You alone are responsible for ensuring that your loan and
repayments comply with tax requirements. Loans made before the Payout Start Date
are generally treated as distributions under the Contract, and may be subject to
withholding and tax penalties for early distributions. Some of these
requirements are stated in Section 72 of the Internal Revenue Code. Please seek
advice from your plan administrator or tax advisor.
When we make a loan, we will transfer an amount equal to the loan amount from
the Variable Account and/or the Fixed Account Options to the LOAN ACCOUNT as
collateral for the loan. The Loan Account is an account established for amounts
transferred from the Variable Subaccounts or Fixed Account as security for an
outstanding Contract loan. We will transfer to the Loan Account amounts from the
Variable Account in proportion to the assets in each Subaccount. If your loan
amount is greater than your Contract Value in the Subaccounts, we will transfer
the remaining required collateral from the Guaranteed Maturity Fixed Account
Options. If your loan amount is greater than your contract value in the
Subaccounts and the Guaranteed Maturity Fixed Account Options, we will transfer
the remaining required collateral from the Dollar Cost Averaging Fixed Account
Options.
We will not charge a Withdrawal Charge on the loan or on the transfer from the
Subaccounts or the Fixed Account. We may, however, apply a Market Value
Adjustment to a transfer from the Fixed Account to the Loan Account. If we do,
we will increase or decrease the amount remaining in the Fixed Account by the
amount of the Market Value Adjustment, so that the net amount transferred to the
Loan Account will equal the desired loan amount. We will charge a Withdrawal
Charge and apply a Market Value Adjustment, if applicable, on a distribution to
repay the loan in full, in the event of loan default.
We will credit interest to the amounts in the Loan Account. The annual interest
rate credited to the Loan Account will be the greater of: (a) 3%; or (b) the
loan interest rate minus 2.25%. The value of the amounts in the Loan Account are
not affected by the changes in the value of the Subaccounts.
When you take out a loan, we will set the loan interest rate. That rate will
apply to your loan until it is repaid. From time to time, we may change the loan
interest rate applicable to new loans. We also reserve the right to change the
terms of new loans.
We will subtract the outstanding Contract loan balance, including accrued but
unpaid interest, from:
(1) the Death Benefit;
(2) full withdrawal proceeds;
(3) the amount available for partial withdrawal;
(4) the amount applied on the Payout Start Date to provide income payments;
and
(5) the Income Base applied on the Payout Start Date to provide income
payments under the Income Benefit Rider.
Usually you must repay a Contract loan within five years of the date the loan is
made. Scheduled payments must be level, amortized over the repayment period, and
made at least quarterly. We may permit a repayment period of 15 or 30 years if
the loan proceeds are used to acquire your principal residence. We may also
permit other repayment periods.
You must mark your loan repayments as such. We will assume that any payment
received from you is a Purchase Payment, unless you tell us otherwise.
Generally, loan payments are allocated to the Subaccount(s) in the proportion
that you have selected for Purchase Payments. Allocations of loan payments are
not permitted to the Fixed Accounts (Guaranteed Maturity Fixed Account and
Dollar Cost Averaging Fixed Account Option). If your Purchase Payment allocation
includes any of the Fixed
28 PROSPECTUS
Accounts, the percentages allocated to the Fixed Accounts will be allocated
instead to the PIMCO Money Market Subaccount.
If you do not make a loan payment when due, we will continue to charge interest
on your loan. We also will declare the entire loan in default. We will subtract
the defaulted loan balance plus accrued interest from any future distribution
under the Contract and keep it in payment of your loan. Any defaulted amount
plus interest will be treated as a distribution for tax purposes (as permitted
by law). As a result, you may be required to pay taxes on the defaulted amount,
incur the early withdrawal tax penalty, and be subject to mandatory 20% federal
withholding. Until we are permitted by law to foreclose on a defaulted loan, we
will continue to charge interest and add unpaid interest to your outstanding
loan balance.
If the total loan balance exceeds the amount available for full withdrawal, we
will mail written notice to your last known address. The notice will state the
amount needed to maintain the Contract in force. If we do not receive payment of
this amount within 31 days after we mail this notice, we will terminate your
Contract.
We may defer making any loan for 6 months after you ask us for a loan, unless
the loan is to pay a premium to us.
INCOME PAYMENTS
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PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that we apply your money to an Income Plan. The Payout Start Date must
be:
.. at least 30 days after the Issue Date; and
.. no later than the day the Annuitant reaches age 90, or the 10th Contract
Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years.
Three Income Plans are available under the Contract. Each is available to
provide:
.. fixed income payments;
.. variable income payments; or
.. a combination of the two.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make
periodic income payments for at least as long as the Annuitant lives. If the
Annuitant dies before we have made all of the guaranteed income payments, we
will continue to pay the remainder of the guaranteed income payments as required
by the Contract.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under
this plan, we make periodic income payments for at least as long as either the
Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint
Annuitant die before we have made all of the guaranteed income payments, we will
continue to pay the remainder of the guaranteed income payments as required by
the Contract.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEARS TO 30
YEARS). Under this plan, we make periodic income payments for the period you
have chosen. These payments do not depend on the Annuitant's life. You may elect
to receive guaranteed payments for periods ranging from 5 to 30 years. Income
payments for less than 120 months may be subject to a withdrawal charge. We will
deduct the mortality and expense risk charge from the Variable Subaccount assets
that support variable income payments even though we may not bear any mortality
risk.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant are alive
before we make each payment. Please note that under such Income Plans, if you
elect to take no minimum guaranteed payments, it is possible that the payee
could receive only 1 income payment if the Annuitant and any joint Annuitant
both die before the second income payment, or only 2 income payments if they die
before the third income payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One
exception to this rule applies if you are receiving income payments that do not
depend on
29 PROSPECTUS
the life of the Annuitant (such as under Income Plan 3). In that case you may
terminate all or part of the income payments at any time and withdraw their
value, subject to withdrawal charges. For Variable Amount income Payments, the
value you may withdraw is equal to the present value of the Variable Amount
Income Payments being terminated, calculated using a discount rate equal to the
assumed investment rate that was used in determining the initial variable
payment. For Fixed Amount Income Payments, the value you may withdraw is equal
to the present value of the Fixed Amount Income Payments being terminated,
calculated using a discount rate equal to the applicable current interest rate.
The applicable current interest rate is the rate we are using on the date we
receive your withdrawal request to determine income payments for a new Income
Plan with a payment period equal to the remaining payment period of the income
payments being terminated. The value you may withdraw may be higher or lower
than it would have been using the interest rate that was initially used to
calculate your Fixed Account Income Payments and your total payments (withdrawal
amount plus income payments already received) may be more or less than the
amount applied to your Income Plan. We deduct applicable premium taxes from the
Contract Value at the Payout Start Date.
We may make other Income Plans available.
You must apply at least the Contract Value in the Fixed Account on the Payout
Start Date to fixed income payments. If you wish to apply any portion of your
Fixed Account balance to provide variable income payments, you should plan ahead
and transfer that amount to the Variable Subaccounts prior to the Payout Start
Date. If you do not tell us how to allocate your Contract Value among fixed and
variable income payments, we will apply your Contract Value in the Variable
Account to variable income payments and your Contract Value in the Fixed Account
to fixed income payments.
We will apply your Contract Value, adjusted by any applicable Market Value
Adjustment, less applicable taxes to your Income Plan on the Payout Start Date.
If the amount available to apply under an Income Plan is less than $2,000, or
not enough to provide an initial payment of at least $50, and state law permits,
we may:
.. pay you the Contract Value, adjusted by any applicable Market Value Adjustment
and less any applicable taxes, in a lump sum instead of the periodic payments
you have chosen; or
.. reduce the frequency of your payments so that each payment will be at least
$50.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Subaccounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) actual mortality experience and (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your
variable income payments may be more or less than your total purchase payments
because (a) variable income payments vary with the investment results of the
underlying Portfolios; and (b) the Annuitant could live longer or shorter than
we expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the
Contract, we assumed an annual investment rate of 3%. If the actual net
investment return of the Variable Subaccounts you choose is less than this
assumed investment rate, then the dollar amount of your variable income payments
will decrease. The dollar amount of your variable income payments will increase,
however, if the actual net investment return exceeds the assumed investment
rate. The dollar amount of the variable income payments stays level if the net
investment return equals the assumed investment rate. Please refer to the
Statement of Additional Information for more detailed information as to how we
determine variable income payments.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for
the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on
the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
3. applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as we are
offering at that time.
We may defer making fixed income payments for a period of up to 6 months or any
shorter time state law may require. If we defer payments for 30 days or more, we
will pay interest as required by law from the date we receive the withdrawal
request to the date we make payment.
INCOME BENEFIT RIDER
For Contract Owners and Annuitants up to and including age 75. This Rider
guarantees that the amount of income payments you receive will not be less than
those determined by applying the Income Base, less any applicable taxes, to the
minimum guaranteed rate (rather than to any current rates we may be offering)
for the Income Plan you select ("Guaranteed Income Benefit"). This Rider does
not affect the amounts paid as a death benefit, partial withdrawal or surrender.
The Rider is optional, has additional charges and may not be available in all
states.
30 PROSPECTUS
QUALIFICATIONS. To qualify for the income benefit payments under this Rider, you
must meet the following requirements as of the Payout Start Date:
.. You must elect a Payout Start Date that is on or after the 10th anniversary of
the Rider Date;
.. The Payout Start Date must be prior to the oldest Annuitant's 90th birthday;
.. The payout Start Date must occur during the 30 day period following a Contract
Anniversary;
.. You must elect to receive fixed income payments, which will be calculated
using the guaranteed payout rates listed in your Contract; and
.. The Income Plan you selected must provide for payments guaranteed for either a
single life or joint lives with a specified period of at least:
. 10 years, if the youngest Annuitant's age is 80 or less on the Payout Start
Date, or
. 5 years, if the youngest Annuitant's age is greater than 80 on the Payout
Start Date.
.. Of course, if your Contract Value, applied to the then current payout rates
offered by Lincoln Benefit, generates higher income payments than those
provided under the Income Benefit Rider, you will receive the higher payment
amount. You may also elect to apply your Contract Value to any other income
plan that we offer at that time.
The Income Benefit Rider will no longer be in effect and the mortality and
expense charge for the Rider will end upon the change of the named Annuitant for
reasons other than death. We may discontinue offering these options at any time.
INCOME BASE
The Income Base is used solely for the purpose of calculating the GUARANTEED
INCOME BENEFIT under this Rider ("Guaranteed Income Benefit") and does not
provide a Contract Value or guarantee performance of any investment option.
On the date we issue the Rider ("Rider Date"), the Income Base is equal to the
Contract Value. After the Rider Date, the Income Base plus any subsequent
purchase payments and less a withdrawal adjustment (described below) for any
subsequent withdrawal will accumulate daily at a rate equivalent to 5% per year
until the earlier of the Payout Start Date, or the first day of the month after
the oldest Contract Owner's (or Annuitant's, if the Contract Owner is not a
living person) 85th birthday. The maximum Income Base is 200% of:
.. the Contract Value on the Rider Date; plus
.. any subsequent purchase payments; less
.. any subsequent withdrawal adjustments.
WITHDRAWAL ADJUSTMENT
The withdrawal adjustment is equal to (a) divided by (b), with the result
multiplied by (c) where:
(a) = the withdrawal amount
(b) = the Contract Value immediately prior to the withdrawal, and
(c) = the most recently calculated Income Base
The Guaranteed Income Benefit amount is determined by applying the Income Base
less any applicable taxes to the guaranteed rates for the Income Plan you elect.
The Income Plan you elect must satisfy the conditions described above.
On the Payout Start Date, the income payment will be the greater of the
guaranteed Income Benefit or the Income Payment provided in the Payout Phase
section.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
applicable law. In certain employment-related situations, employers are required
by law to use the same income payment tables for men and women. Accordingly, if
the Contract is to be used in connection with an employment-related retirement
or benefit plan and we do not offer unisex annuity tables in your state, you
should consult with legal counsel as to whether the purchase of a Contract is
appropriate.
31 PROSPECTUS
DEATH BENEFITS
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WE WILL PAY A DEATH BENEFIT PRIOR TO THE PAYOUT START DATE ON:
1. the death of any Contract Owner or,
2. the death of the Annuitant, if the Contract Owner is not a living person.
We will pay the death benefit to the new Contract Owner as determined
immediately after the death. The new Contract Owner would be a surviving
Contract Owner or, if none, the Beneficiaries). If the Contract Owner is not a
living person, in the case of the death of the Annuitant, we will pay the death
benefit to the current Contract Owner.
A claim for a distribution on death must include DUE PROOF OF DEATH. Where there
are multiple Beneficiaries, we will value the Death Benefit at the time the
first Beneficiary submits a complete claim for payment of the Death Benefit. We
will accept the following documentation as "Due Proof of Death":
.. a certified copy of a death certificate,
.. a certified copy of a decree of a court of competent jurisdiction as to the
finding of death, or
.. any other proof acceptable to us.
Your beneficiary should submit a complete claim for payment of the Death Benefit
within 180 days of the relevant death in order to claim the standard or enhanced
Death Benefit. If your beneficiary does not submit a complete claim for payment
of the Death Benefit within 180 days of the relevant death, the beneficiary will
be paid the Contract Value which may be adjusted as described in "Death Benefit
Payments" on page 34. You may specify that the death benefit be paid under a
specific Income Plan by submitting a written request to our Service Center. If
you so request, your Beneficiary may not change to a different Income Plan or
lump sum. Once we accept the written request, the change or restriction will
take effect as of the date you signed the request.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, if we receive a complete request for payment of
the Death Benefit within 180 days of the date of death, the standard Death
Benefit is equal to the greatest of:
.. the sum of all Purchase Payments reduced by withdrawal adjustments. The
withdrawal adjustment for Purchase Payments is equal to (a) divided by (b),
with the result multiplied by (c) where:
(a) is the withdrawal amount;
(b) is the Contract Value immediately prior to the withdrawal; and
(c) is the sum of all prior purchase payments adjusted by any prior
withdrawals; or
. the Contract Value on the date we determine the Death Benefit, or
. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of
Contract Value, i.e., the Contract Value adjusted by any market value
adjustment, less any applicable withdrawal charge or premium tax) on the
date we determine the Death Benefit, or
. the Contract Value on each DEATH BENEFIT ANNIVERSARY prior to the date we
determine the Death Benefit, increased by any purchase payment made since
that Death Benefit Anniversary and reduced by an adjustment for any
withdrawals since that Death Benefit Anniversary.
In other words, for each Death Benefit Anniversary that occurs prior to the date
we determine the Death Benefit, we will calculate an amount equal to the
Contract Value on that Death Benefit Anniversary, plus any purchase payments
made since that Death Benefit Anniversary, and minus an adjustment for any
withdrawals made since that Death Benefit Anniversary. (The calculation of the
withdrawal adjustment is described on page 33.) If there are multiple Death
Benefit Anniversaries, we will make multiple calculations. The highest result
will be compared to the other three values listed above in order to determine
the Death Benefit.
"Death Benefit Anniversaries" occur every 7th Contract anniversary until the
oldest Contract Owner's 80th birthday, or the Annuitant's 80th birthday if the
Contract Owner is not a living person. The Contract Anniversary immediately
following the oldest Contract Owner's 80th birthday, or the Annuitant's 80th
birthday if the Contract Owner is not a living person, will also be a Death
Benefit Anniversary and is the final Death Benefit Anniversary.
The Death Benefit Anniversary withdrawal adjustment is equal to (a) divided by
(b), with the result multiplied by (c), where:
(a) is the withdrawal amount;
(b) is the Contract Value immediately prior to the withdrawal; and
(c) is the Contract Value on the Death Benefit Anniversary adjusted by any
prior purchase payments or withdrawals made since that Anniversary.
We will determine the value of the Death Benefit as of the end of the Valuation
Date on which we receive a complete request for payment of the death benefit. If
we receive a request after 3:00 p.m. Central Time on a Valuation Date, we will
process the request as of the end of the following Valuation Date.
32 PROSPECTUS
ENHANCED DEATH BENEFIT RIDER
The Enhanced Death Benefit Rider is an optional benefit that you may elect if
the Contract Owners and Annuitants are not older than age 80 on the date we
receive the application, or the date we receive the written request to add this
Rider, whichever is later. If the Contract Owner is a living individual, the
Enhanced Death Benefit applies only upon the death of the Contract Owner. If the
Contract Owner is not a living individual, the Enhanced Death Benefit applies
only upon the death of the Annuitant. For Contracts with the Enhanced Death
Benefit Rider, the death benefit will be the greatest of the standard death
benefit above, or the Enhanced Death Benefit. The Enhanced Death Benefit is
equal to the greater of Enhanced Death Benefit A or Enhanced Death Benefit B.
Enhanced Death Benefit A or B may not be available in all states. This rider
will automatically terminate on the Payout Start Date.
The Enhanced Death Benefit will never be greater than the maximum death benefit
allowed by any state nonforfeiture laws that govern the Contract. The Enhanced
Death Benefit Rider and the mortality and expense charge for the Rider will
terminate upon the change of Contract Owner (or the Annuitant if the Contract
Owner is not a living person) for reasons other than death.
ENHANCED DEATH BENEFIT A. On the date we issue the Rider ("RIDER DATE"),
Enhanced Death Benefit A is equal to the Contract Value on that date. After the
Rider Date, Enhanced Death Benefit A is the greatest of the ANNIVERSARY VALUES
as of the date we determine the death benefit. The "Anniversary Value" is equal
to the Contract Value on a Contract Anniversary, increased by purchase payments
made since that Anniversary and reduced by a withdrawal adjustment, as described
below, for any partial withdrawals since that Anniversary.
We will calculate Anniversary Values for each Contract Anniversary up until the
earlier of:
.. the date we determine the death benefit; or
.. the first Contract Anniversary following the oldest Contract Owner's or, if
the Contract Owner is not a living person, the Annuitant's 80th birthday, or
the first day of the 61st month following the Rider Date, whichever is later.
After age 80, or the first day of the 61st month following the Rider Date,
whichever is later, we will recalculate the Enhanced Death Benefit A only for
purchase payments and withdrawals.
The withdrawal adjustment is equal to (a) divided by (b), and the result
multiplied by (c) where:
(a) = is the withdrawal amount,
(b) = is the Contract Value immediately prior to the withdrawal, and
(c) = the most recently calculated Enhanced Death Benefit A.
ENHANCED DEATH BENEFIT B. The Enhanced Death Benefit B on the Rider Date is
equal to the Contract Value on that date. After the Rider Date, the Enhanced
Death Benefit B, plus any subsequent purchase payments and less a withdrawal
adjustment, as described below, will accumulate daily at a rate equivalent to 5%
per year until the earlier of:
.. the date we determine the death benefit; or
.. the first day of the month following the oldest Contract Owner's or, if the
Contract Owner is not a living person, the Annuitant's 80th birthday, or the
first day of the 61st month following the Rider Date, whichever is later.
After age 80, or the first day of the 61st month following the Rider Date,
whichever is later, we will recalculate the Enhanced Death Benefit B only for
purchase payments and withdrawals. The maximum amount of Enhanced Death Benefit
B is 200% of:
.. the Contract Value on the Rider Date; plus
.. any subsequent purchase payments; less
.. any subsequent withdrawal adjustments.
The withdrawal adjustment is equal to (a) divided by (b), and the result
multiplied by (c) where:
(a) = the withdrawal amount,
(b) = is the Contract Value immediately prior to the withdrawal, and
(c) = is the most recently calculated Enhanced Death Benefit B.
ENHANCED EARNINGS DEATH BENEFIT RIDER
For Contract Owners and Annuitants up to and including age 75, the Enhanced
Earnings Death Benefit Rider is an optional benefit that you may elect.
If the Contract Owner is a living person, the Enhanced Earnings Death Benefit
Rider applies only upon the death of the Contract Owner. If the Contract Owner
is not a living person, the Enhanced Earnings Death Benefit Rider applies only
upon the death of the Annuitant. The Enhanced Earnings Death Benefit Rider and
the annual charge for the Rider will terminate upon the change of Contract Owner
(or the Annuitant if the Contract Owner is not a living person) for reasons
other than death. The Rider may not be available in all states. We may
discontinue the offering of the Rider at any time. This rider will automatically
terminate on the Payout Start Date.
Under the Enhanced Earnings Death Benefit Rider, the Enhanced Earnings Death
Benefit is determined as follows:
If the oldest Contract Owner, or the Annuitant if the Contract Owner is not a
living person, is age 55 or younger on the date we receive the completed
application, or we receive written request to add this
33 PROSPECTUS
rider, whichever is later, the Enhanced Earnings Death Benefit will be:
.. the lesser of 100% of IN-FORCE PREMIUM (excluding purchase payments made after
the Rider Date and in the twelve month period immediately preceding the death
of the Contract Owner, or the Annuitant if the Contract Owner is not a living
person) or 50% of In-Force Earnings, calculated as of the date we receive due
proof of death.
If the oldest Contract Owner, or the Annuitant if the Contract Owner is not a
living person, is between the ages of 56 and 65 on the date we receive the
completed application or the date we receive the written request to add this
rider, whichever is later, the Enhanced Earnings Death Benefit will be:
.. the lesser of 80% of the In-Force Premium (excluding purchase payments made
after the Rider Date and in the twelve month period immediately preceding the
death of the Contract Owner, or the Annuitant if the Contract Owner is not a
living person) or 40% of In-Force Earning, calculated as of the date we
receive due proof of death.
If the oldest Contract Owner, or the Annuitant if the Contract Owner is not a
living person, is between the ages of 66 and 75 on the date we receive the
completed application or the date we receive the written request to add this
rider, whichever is later, the Enhanced Earnings Death Benefit will be:
.. the lesser of 50% of In-Force Premium (excluding purchase payments made after
the Rider Date and in the twelve month period immediately preceding the death
of the Contract Owner, or the Annuitant if the Contract Owner is not a living
person) or 25% of In-Force Earnings, calculated as of the date we receive due
proof of death.
For purpose of calculating the Enhanced Earnings Death Benefit, the following
definitions apply:
.. In-Force Earnings is the greater of (a) the current Contract Value less the
In-Force Premium; or (b) zero.
.. In-Force Premiums are defined as follows:
. If the Rider Date is the same as the Issue Date of the Contract:
. The sum of all the purchase payments less the sum of all the
Excess-of-Earnings Withdrawals.
.. If the Rider Date is later than the Contract issue date:
. The Contract Value as of Rider Date plus all the purchase payments made
after the Rider Date less the sum of all the Excess-of-Earnings Withdrawals
after the Rider Date Excess-of-Earnings Withdrawals are defined as follows:
. For each withdrawal, this amount is equal to the amount, if any, by which
the withdrawal exceeds the In-Force Earnings immediately prior to the
withdrawal.
We will calculate the Enhanced Earnings Death Benefit Rider as of the date we
receive Due Proof of Death. We will pay the Enhanced Earnings Death Benefit with
the death benefit as described under "Death Benefit Payments" below.
The value of the Enhanced Earnings Death Benefit largely depends on the amount
of earnings that accumulate under your Contract. If you expect to withdraw the
earnings from your Contract Value, electing the Enhanced Earnings Death Benefit
Rider may not be appropriate. For purposes of calculating the Enhanced Earnings
Death Benefit, earnings are considered to be withdrawn first before purchase
payments. Your financial advisor can help you decide if the Enhanced Earnings
Death Benefit Rider is right for you.
For examples of how the death benefit is calculated under the Enhanced Earnings
Death Benefit Rider, see Appendix C.
DEATH BENEFIT PAYMENTS
1. If the sole new Contract Owner is your spouse:
(a) Your spouse may elect, within 180 days of the date of your death, to
receive the Death Benefit described above in a lump sum.
(b) Your spouse may elect, within 180 days of the date of your death, to
receive an amount equal to the Death Benefit paid out through an Income Plan.
Payments from the Income Plan must begin within one year of your date of death.
The payments must be:
(i) over the life of your spouse; or
(ii) for a guaranteed number of payments from 5 to 30 years but not to exceed
the life expectancy of your spouse; or
(iii) over the life of your spouse with a guaranteed number of payments from
5 to 30 years but not to exceed the life expectancy of your spouse.
If your spouse chooses to continue the Contract or, does not elect one of the
options above within 180 days of your death, the Contract will continue in the
Accumulation Phase as if no death has occurred. If the Contract continues in the
Accumulation Phase, the following conditions apply:
(a) On the date the Contract is continued, the Contract Value will be the
Death Benefit as determined as of the Valuation Date on which we received due
proof of death (the next Valuation Date, if we receive due proof of death after
3 p.m. Central Time). Unless otherwise instructed by the continuing spouse, the
excess, if any, of the Death Benefit amount over the Contract Value will be
allocated to the Subaccounts. This excess will be allocated in proportion to
your Contract Value in those Subaccounts as of the end of the Valuation Period
during which we receive the complete request for payment of the
34 PROSPECTUS
Death Benefit, except that any portion of this excess attributable to the Fixed
Account Options will be allocated to the Money Market Subaccount. Within 30 days
of the date the Contract is continued, your surviving spouse may choose one of
the following transfers without incurring a transfer fee:
(i) transfer all or a portion of the excess among the Subaccounts;
(ii) transfer all or a portion of the excess into the Guaranteed Maturity
Fixed Account and begin a new Guarantee Period; or
(iii) transfer all or a portion of the excess into a combination of
Subaccounts, or the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each
Contract Year and is subject to any minimum allocation amount specified in your
Contract. The surviving spouse may make a single withdrawal of any amount within
one year of the date of death without incurring a Withdrawal Charge or Market
Value Adjustment.
After the Contract is continued, prior to the Payout Start Date, the Death
Benefit of the continued Contract will be the greatest of:
(a) the sum of all purchase payments reduced by any withdrawal adjustments; or
(b) the Contract Value on the date we determine the Death Benefit; or
(c) the Settlement Value on the date we determine the Death Benefit; or
(d) the Contract Value on each Death Benefit Anniversary prior to the date we
determine the Death Benefit, increased by any Purchase Payments made since that
Death Benefit Anniversary and reduced by an adjustment for any withdrawals, as
defined in the Death Benefit provision.
Please see DEATH BENEFIT AMOUNT on page 32 for a detailed explanation of how
these amounts are calculated.
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person, the new
Contract Owner has the following options:
(a) The new Contract Owner may elect, within 180 days of the date of your
death, to receive the Death Benefit in a lump sum.
(b) The new Contract Owner may elect, within 180 days of the date of your
death, to receive an amount equal to the Death Benefit paid out through an
Income Plan. Payments from the annuity option must begin within one year of
your date of death. The Payments must be:
(i) over the life of the new Contract Owner, or for a guaranteed number of
payments from 5 to 30 years but not to exceed the life expectancy of the new
Contract Owner; or
(ii) over the life of the new Contract Owner with a guaranteed number of
payments from 5 to 30 years but not to exceed the life expectancy of the new
Contract Owner.
(c) If the New Owner does not elect one of the options above within 180 days
of death, then the New Owner must receive the Contract Value payable within 5
years of your date of death. Under this option, if the Settlement Value is
greater than the Contract Value as determined as of the Valuation Date on
which we received a complete request for settlement, which includes Due Proof
of Death (the next Valuation Date, if we receive Due Proof of Death after 3:00
p.m. Central Time), we will allocate the excess to the Variable Subaccount
selected by the New Owner. In the absence of instructions, we will allocate
that amount to the Money Market Variable Subaccount. Until the Contract Value
is withdrawn, it will vary in accordance with the investment options selected
by the New Owner, and the New Owner may exercise all rights as set forth in
the TRANSFERS section during this 5-year period.
No additional purchase payments may be added to the Contract under this
election. Withdrawal Charges will be waived for any withdrawals made during this
5-year period.
If the New Owner dies prior to receiving all of the Contract Value, then the New
Owner's named beneficiary(ies) will receive the greater of the Settlement Value
or the remaining Contract Value. This amount must be received as a lump sum
within 5 years of the date of the original Owner's death.
3. If the new Contract Owner is a non-Living Person, the new Contract Owner has
the following options:
(a) The non-living Contract Owner may elect, within 180 days of your death, to
receive the Death Benefit in a lump sum.
(b) If the New Owner does not elect the option above, then the New Owner must
receive the Contract Value payable within 5 years of your date of death. Under
this option, if the Settlement Value is greater than the Contract Value as
determined as of the Valuation Date on which we received Due Proof of Death (the
next Valuation Date, if we receive Due Proof of Death after 3:00 pm Central
Time), we will allocate the excess to the Variable Subaccount selected by the
New Owner. In the absence of instructions, we will allocate that amount to the
Money Market Variable Subaccount. Until the Contract Value is withdrawn, it will
vary in accordance with the investment options selected by the New Owner, and
the New Owner may exercise all rights as set forth in the Transfers provision
during this 5-year period.
No additional purchase payments may be added to the Contract under this
election. Withdrawal Charges will be waived during this 5-year period.
35 PROSPECTUS
We reserve the right to offer additional options upon Death of Owner. Under any
of these options, all ownership rights, subject to any restrictions previously
placed upon the Beneficiary, are available to the New Owner.
If any new Contract Owner is not a Living Person, all new Contract Owners will
be considered to be non-Living Persons for the above purposes.
We reserve the right to waive or extend the 180-day limit on a
non-discriminatory basis.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout
Start Date, the Contract Owner must elect one of the following options:
1. If the Contract Owner is a Living Person, the Contract will continue with a
new Annuitant as described on page 12.
2. If the Contract Owner is not a Living Person:
(a) The non-living Contract Owner may elect, within 180 days of the
Annuitant's date of death, to receive the Death Benefit in a lump sum; or
(b) If the Contract Owner does not elect the above option, then the Owner must
receive the Contract Value payable within 5 years of the Annuitant's date of
death. Under this option, if the Settlement Value is greater than the Contract
Value as determined as of the Valuation Date on which we received Due Proof of
Death (the next Valuation Date, if we receive Due Proof of Death after 3:00 pm
Central Time), we will allocate the excess to the Variable Subaccount selected
by the New Owner. In the absence of instructions, we will allocate that amount
to the Money Market Variable Subaccount. Until the Contract Value is withdrawn,
it will vary in accordance with the investment options selected by the New
Owner, and the Contract Owner may then exercise all rights as set forth in the
TRANSFERS section during this 5-year period.
No additional purchase payments may be added to the Contract under this
election. Withdrawal Charges will be waived during this 5-year period.
If the non-living Contract Owner does not make one of the above described
elections, the Settlement Value must be withdrawn by a non-living Contract Owner
on or before the mandatory distribution date 5 years after the Annuitant's
death.
We reserve the right to waive or extend the 180-day limit on a
non-discriminatory basis.
MORE INFORMATION
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LINCOLN BENEFIT LIFE COMPANY.
Lincoln Benefit Life Company is a stock life insurance company organized under
the laws of the state of Nebraska in 1938. Our legal domicile and principal
business address is 2940 South 84th Street, Lincoln, Nebraska, 68506-4142.
Lincoln Benefit is a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life" or "ALIC"), a stock life insurance company incorporated under
the laws of the State of Illinois. Allstate Life is a wholly owned subsidiary of
Allstate Insurance Company ("AIC"), a stock property-liability insurance company
incorporated under the laws of Illinois. All outstanding capital stock of
Allstate is owned by The Allstate Corporation ("Allstate").
We are authorized to conduct life insurance and annuity business in the
District of Columbia, Guam, U.S. Virgin Islands and all states except New York.
We intend to market the Contract everywhere we conduct variable annuity
business. The Contracts offered by this prospectus are issued by us and will be
funded in the Variable Account and/or the Fixed Account Under our reinsurance
agreements with Allstate Life, substantially all contract related transactions
are transferred to Allstate Life. Through our reinsurance agreements with
Allstate Life, substantially all of the assets backing our reinsured liabilities
are owned by Allstate Life. These assets represent our general account and are
invested and managed by Allstate Life. Accordingly, the results of operations
with respect to applications received and contracts issued by Lincoln Benefit
are not reflected in our consolidated financial statements. The amounts
reflected in our consolidated financial statements relate only to the investment
of those assets of Lincoln Benefit that are not transferred to Allstate Life
under the reinsurance agreements. While the reinsurance agreements provide us
with financial backing from Allstate Life, it does not create a direct
contractual relationship between Allstate Life and you.
Under the Company's reinsurance agreements with ALIC, the Company reinsures all
reserve liabilities with ALIC except for variable contracts. The Company's
variable contract assets and liabilities are held in legally-segregated,
unitized Variable Accounts and are retained by the Company. However, the
transactions related to such variable contracts such as premiums, expenses and
benefits are transferred to ALIC.
Lincoln Benefit is highly rated by independent agencies, including A.M. Best,
Moody's, and Standard & Poor's. These ratings are based on our reinsurance
agreement with Allstate Life, and reflect financial strength. The ratings are
not intended to reflect the financial strength or investment experience of the
Variable Account. We may from time to time advertise these ratings in our sales
literature.
36 PROSPECTUS
THE VARIABLE ACCOUNT
Lincoln Benefit established the Lincoln Benefit Life Variable Annuity Account in
1992. We have registered the Variable Account with the SEC as a unit investment
trust. The SEC does not supervise the management of the Variable Account or
Lincoln Benefit.
We own the assets of the Variable Account. The Variable Account is a segregated
asset account under Nebraska law. That means we account for the Variable
Account's income, gains and losses separately from the results of our other
operations. It also means that only the assets of the Variable Account that are
in excess of the reserves and other Contract liabilities with respect to the
Variable Account are subject to liabilities relating to our other operations.
Our obligations arising under the Contracts are general corporate obligations of
Lincoln Benefit.
The Variable Account consists of Variable Subaccounts. Each Variable Subaccount
invests in a corresponding Portfolio. We may add new Variable Subaccounts or
eliminate one or more of them, if we believe marketing, tax, or investment
conditions so warrant. We may also add other Variable Subaccounts that may be
available under other variable annuity contracts. We do not guarantee the
investment performance of the Variable Account, its Subaccounts or the
Portfolios. We may use the Variable Account to fund our other annuity contracts.
We will account separately for each type of annuity contract funded by the
Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolio at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Subaccounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract Owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Subaccount by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable Variable
Subaccount by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted upon on a pro-rata basis to reduce the votes
eligible to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi-annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment fund. Any substitution of securities will comply with the
requirements of the Investment Company Act of 1940. We also may add new Variable
Subaccounts that invest in additional mutual funds. We will notify you in
advance of any change.
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate
accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the same Portfolio. The boards of directors of these Portfolios monitor for
possible conflicts among separate accounts buying shares of the Portfolios.
Conflicts could develop for a variety of reasons. For example, differences in
treatment under tax and other laws or the failure by a separate account to
comply with such laws could cause a conflict. To eliminate a conflict, a
Portfolio's board of directors may require a separate account to withdraw its
participation in a Portfolio. A Portfolio's net asset value could decrease if it
had to sell investment securities to pay redemption proceeds to a separate
account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. The Contracts described in this prospectus are sold by registered
representatives of broker-dealers who are our licensed insurance agents, either
individually or through an incorporated insurance agency. Commissions paid to
broker-dealers may vary, but we estimate that the total commissions paid on all
Contract sales will not exceed 7.5% of all Purchase Payments (on a present value
basis). From time to time, we may offer additional sales incentives of up to
1.5% of Purchase Payments and other cash bonuses to broker-dealers who maintain
certain sales volume levels.
37 PROSPECTUS
ALFS, Inc. ("ALFS") located at 3100 Sanders Road, Northbrook, IL 60062-7154
serves as distributor of the Contracts. ALFS, an affiliate of Lincoln Benefit,
is a wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a
registered broker dealer under the Securities and Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.
Lincoln Benefit does not pay ALFS a commission for distribution of the
Contracts. The underwriting agreement with ALFS provides that we will reimburse
ALFS for expenses incurred in distributing the Contracts, including liability
arising out of services we provide on the Contracts.
ADMINISTRATION. We have primary responsibility for all administration of the
Contracts and the Variable Account. We provide the following administrative
services, among others:
.. issuance of the Contracts;
.. maintenance of Contract Owner records;
.. Contract Owner services;
.. calculation of unit values;
.. maintenance of the Variable Account; and
.. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least
annually. You should notify us promptly in writing of any address change. You
should read your statements and confirmations carefully and verify their
accuracy. You should contact us promptly if you have a question about a periodic
statement. We will investigate all complaints and make any necessary adjustments
retroactively, but you must notify us of a potential error within a reasonable
time after the date of the questioned statement. If you wait too long, we
reserve the right to make the adjustment as of the date that we receive notice
of the potential error.
We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
QUALIFIED PLANS
If you use the Contract within a qualified plan, the plan may impose different
or additional conditions or limitations on withdrawals, waivers of withdrawal
charges, death benefits, Payout Start Dates, income payments, and other Contract
features. In addition, adverse tax consequences may result if qualified plan
limits on distributions and other conditions are not met. Please consult your
qualified plan administrator for more information.
LEGAL MATTERS
All matters of Nebraska law pertaining to the Contract, including the validity
of the Contract and our right to issue the Contract under Nebraska law, have
been passed upon by William F. Emmons, Vice President, Assistant General Counsel
and Assistant Secretary of Lincoln Benefit. Legal matters relating to the
federal securities laws in connection with the Contracts described in this
prospectus are being passed upon by the law firm of Jorden Burt LLP, 1025 Thomas
Jefferson St. N.W., East Lobby-Suite 400, Washington, D.C. 20007-0805.
38 PROSPECTUS
TAXES
- --------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. LINCOLN
BENEFIT MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
TAXATION OF LINCOLN BENEFIT LIFE
COMPANY
Lincoln Benefit is taxed as a life insurance company under Part I of Subchapter
L of the Internal Revenue Code (the "Code"). Since the Variable Account is not
an entity separate from Lincoln Benefit, and its operations form a part of
Lincoln Benefit, it will not be taxed separately. Investment income and realized
capital gains of the Variable Account are automatically applied to increase
reserves under the Contract. Under existing federal income tax law, Lincoln
Benefit believes that the Variable Account investment income and capital gains
will not be taxed to the extent that such income and gains are applied to
increase the reserves under the Contract. Accordingly, Lincoln Benefit does not
anticipate that it will incur any federal income tax liability attributable to
the Variable Account, and therefore Lincoln Benefit does not intend to make
provisions for any such taxes. If Lincoln Benefit is taxed on investment income
or capital gains of the Variable Account, then Lincoln Benefit may impose a
charge against the Variable Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
.. the Contract Owner is a natural person,
.. the investments of the Variable Account are "adequately diversified" according
to Treasury Department regulations, and
.. Lincoln Benefit is considered the owner of the Variable Account assets for
federal income tax purposes.
NON-NATURAL OWNERS. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
does not enjoy tax deferral and is taxed as ordinary income received or accrued
by the owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain qualified plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax deferral
as described in the Exceptions To The Non-Natural Owner Rule section.
In accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
surviving Contract Owner. Since the trust will be the surviving Contract Owner
in all cases, the Death Benefit will be payable to the trust notwithstanding any
beneficiary designation on the annuity contract. A trust, including a grantor
trust, has two options for receiving any death benefits: 1) a lump sum payment;
or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the Contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the Contract owner during the taxable
year. Although Lincoln Benefit does not have control over the Portfolios or
their investments, we expect the Portfolios to meet the diversification
requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered
the owner of separate account assets if he possesses incidents of ownership in
those assets, such as the ability to exercise investment control over the
assets. At the time the diversification regulations were issued, the Treasury
Department
39 PROSPECTUS
announced that the regulations do not provide guidance concerning circumstances
in which investor control of the separate account investments may cause a
Contract owner to be treated as the owner of the separate account. The Treasury
Department also stated that future guidance would be issued regarding the extent
that owners could direct sub-account investments without being treated as owners
of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in
rulings in which it found that Contract owners were not owners of separate
account assets. For example, you have the choice to allocate premiums and
Contract Values among a broader selection of investment alternatives. Also, you
may be able to transfer among investment alternatives more frequently than in
such rulings. These differences could result in you being treated as the owner
of the Variable Account. If this occurs, income and gain from the Variable
Account assets would be includible in your gross income. Lincoln
Benefit does not know what standards will be set forth in any regulations or
rulings which the Treasury Department may issue. It is possible that future
standards announced by the Treasury Department could adversely affect the tax
treatment of your Contract. We reserve the right to modify the Contract as
necessary to attempt to prevent you from being considered the federal tax owner
of the assets of the Variable Account. However, we make no guarantee that such
modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under
a Non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a full withdrawal
under a Non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity
payments received from a Non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the Contract. If you elect variable annuity payments, the amount excluded from
taxable income is determined by dividing the investment in the Contract by the
total number of expected payments. The annuity payments will be fully taxable
after the total amount of the investment in the Contract is excluded using these
ratios. The Federal tax treatment of annuity payments is unclear in some
respects. As a result, if the IRS should provide further guidance, it is
possible that the amount we calculate and report to the IRS as taxable could be
different. If you die, and annuity payments cease before the total amount of the
investment in the Contract is recovered, the unrecovered amount will be allowed
as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:
.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of the Contract Owner's death;
.. if any Contract Owner dies prior to the Payout Start Date, the entire interest
in the Contract will be distributed within 5 years after the date of the
Contract Owner's death. These requirements are satisfied if any portion of the
Contract Owner's interest that is payable to (or for the benefit of) a
designated Beneficiary is distributed over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of the Beneficiary) and
the distributions begin within 1 year of the Contract Owner's death. If the
Contract Owner's designated Beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner.
.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract Owned by a
non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income
as follows:
.. if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
.. if distributed under an Income Plan, the amounts are taxed in the same manner
as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
40 PROSPECTUS
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or becoming totally disabled,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made under an immediate annuity, or
.. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other modification of the payment stream would violate the
requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. You should consult a competent tax
advisor prior to taking a withdrawal.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is
a tax-free exchange of a non-qualified life insurance contract, endowment
contract or annuity contract for a new non-Qualified annuity contract. The
contract owner(s) must be the same on the old and new contract. Basis from the
old contract carries over to the new contract so long as we receive that
information from the relinquishing company. If basis information is never
received, we will assume that all exchanged funds represent earnings and will
allocate no cost basis to them.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Except for certain Qualified Contracts, any amount you receive as a
loan under a Contract, and any assignment or pledge (or agreement to assign or
pledge) of the Contract Value is taxed as a withdrawal of such amount or portion
and may also incur the 10% penalty tax. Currently we do not allow assignments.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified
deferred annuity contracts issued by Lincoln Benefit (or its affiliates) to the
same Contract Owner during any calendar year be aggregated and treated as one
annuity contract for purposes of determining the taxable amount of a
distribution.
INCOME TAX WITHHOLDING
Generally, Lincoln Benefit is required to withhold federal income tax at a rate
of 10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% of the taxable
amount. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Lincoln Benefit is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. In certain states, if there is federal withholding,
then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that a withholding agent must
withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident
alien is someone other than a U.S. citizen or resident alien. Withholding may be
reduced or eliminated by an income tax treaty between the U.S. and the
non-resident alien's country of residence if the payee provides a U.S. taxpayer
identification number on Form W-8BEN. A U.S. taxpayer identification number is a
social security number or an individual taxpayer identification number ("ITIN").
ITINs are issued by the IRS to non-resident alien individuals who are not
eligible to obtain a social security number.
TAX QUALIFIED CONTRACTS
The income on qualified plan and IRA investments is tax deferred, and the income
on variable annuities held by such plans does not receive any additional tax
deferral. You should review the annuity features, including all benefits and
expenses, prior to purchasing a variable annuity in a qualified plan or IRA.
Contracts may be used as investments with certain qualified plans such as:
.. Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the
Code;
.. Roth IRAs under Section 408A of the Code;
.. Simplified Employee Pension Plans under Section 408(k) of the Code;
.. Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section
408(p) of the Code;
.. Tax Sheltered Annuities under Section 403(b) of the Code;
41 PROSPECTUS
.. Corporate and Self Employed Pension and Profit Sharing Plans under Sections
401 and 403; and
.. State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans under Section 457.
Lincoln Benefit reserves the right to limit the availability of the Contract for
use with any of the Qualified Plans listed above or to modify the Contract to
conform with tax requirements.
The tax rules applicable to participants in such qualified plans vary according
to the type of plan and the terms and conditions of the plan itself. Adverse tax
consequences may result from certain transactions such as excess contributions,
premature distributions, and, distributions that do not conform to specified
commencement and minimum distribution rules. Lincoln Benefit can issue an
individual retirement annuity on a rollover or transfer of proceeds from a
decedent's IRA or Qualified Plan under which the decedent's surviving spouse is
the beneficiary. Lincoln Benefit does not offer an individual retirement annuity
that can accept a transfer of funds for any other, non-spousal, beneficiary of a
decedent's IRA or Qualified Plan.
In the case of certain qualified plans, the terms of the plans may govern the
right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED QUALIFIED CONTRACT. If you
make a partial withdrawal under a Qualified Contract other than a Roth IRA, the
portion of the payment that bears the same ratio to the total payment that the
investment in the Contract (i.e., nondeductible IRA contributions, after tax
contributions to qualified plans) bears to the Contract Value, is excluded from
your income. We do not keep track of nondeductible contributions, and all tax
reporting of distributions from Qualified Contracts other than Roth IRAs will
indicate that the distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to any Roth IRA and which
are:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made to a beneficiary after the Contract Owner's death,
.. attributable to the Contract Owner being disabled, or
.. made for a first time home purchase (first time home purchases are subject to
a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. All tax reporting of distributions from Roth
IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, qualified plans require minimum
distributions upon reaching age 70 1/2. Failure to withdraw the required minimum
distribution will result in a 50% tax penalty on the shortfall not withdrawn
from the Contract. Not all income plans offered under the Contract satisfy the
requirements for minimum distributions. Because these distributions are required
under the Code and the method of calculation is complex, please see a competent
tax advisor.
THE DEATH BENEFIT AND QUALIFIED CONTRACTS. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.
It is also possible that the certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under qualified plans, such as in connection with
a 403(b) plan.
Lincoln Benefit reserves the right to limit the availability of the Contract for
use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM QUALIFIED CONTRACTS. A 10% penalty
tax applies to the taxable amount of any premature distribution from a Qualified
Contract. The penalty tax generally applies to any distribution made prior to
the date you attain age 59 1/2. However, no penalty tax is incurred on
distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or total disability,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made pursuant to an IRS levy,
.. made for certain medical expenses,
.. made to pay for health insurance premiums while unemployed (only applies for
IRAs),
.. made for qualified higher education expenses (only applies for IRAs), and
42 PROSPECTUS
.. made for a first time home purchase (up to a $10,000 lifetime limit and only
applies for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON QUALIFIED CONTRACTS. With respect to
Qualified Contracts using substantially equal periodic payments as an exception
to the penalty tax on premature distributions, any additional withdrawal or
other modification of the payment stream would violate the requirement that
payments must be substantially equal. Failure to meet this requirement would
mean that the income portion of each payment received prior to the later of 5
years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty
tax unless another exception to the penalty tax applied. The tax for the year of
the modification is increased by the penalty tax that would have been imposed
without the exception, plus interest for the years in which the exception was
used. You should consult a competent tax advisor prior to taking a withdrawal.
INCOME TAX WITHHOLDING ON QUALIFIED CONTRACTS. Generally, Lincoln Benefit is
required to withhold federal income tax at a rate of 10% from all non-annuitized
distributions that are not considered "eligible rollover distributions." The
customer may elect out of withholding by completing and signing a withholding
election form. If no election is made, we will automatically withhold the
required 10% from the taxable amount. In certain states, if there is federal
withholding, then state withholding is also mandatory. Lincoln Benefit is
required to withhold federal income tax at a rate of 20% on all "eligible
rollover distributions" unless you elect to make a "direct rollover" of such
amounts to an IRA or eligible retirement plan. Eligible rollover distributions
generally include all distributions from Qualified Contracts, excluding IRAs,
with the exception of:
.. required minimum distributions, or,
.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,
.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,
.. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding
requirement, Lincoln Benefit is required to withhold federal income tax using
the wage withholding rates. The customer may elect out of withholding by
completing and signing a withholding election form. If no election is made, we
will automatically withhold using married with three exemptions as the default.
In certain states, if there is federal withholding, then state withholding is
also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that a withholding agent must
withhold 30% of the taxable amounts paid to a non-resident alien. A non-resident
alien is someone other than a U.S. citizen or resident alien. Withholding may be
reduced or eliminated by an income tax treaty between the U.S. and the
non-resident alien's country of residence if the payee provides a U.S. taxpayer
identification number on Form W-8BEN. A U.S. taxpayer identification number is a
social security number or an individual taxpayer identification number ("ITIN").
ITINs are issued by the IRS to non-resident alien individuals who are not
eligible to obtain a social security number.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
plans may be "rolled over" on a tax-deferred basis into an Individual Retirement
Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The income portion of a conversion or rollover distribution is taxable
currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS)
Internal Revenue Code Section 408 permits a custodian or trustee of an
Individual Retirement Account to purchase an annuity as an investment of the
Individual Retirement Account. If an annuity is purchased inside of an
Individual Retirement Account, then the Annuitant must be the same as the
beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract
43 PROSPECTUS
in the accumulation phase, with the Annuitant's surviving spouse as the new
Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under
the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;
3) We receive a complete request for settlement for the death of the Annuitant;
and
4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has
continued the Individual Retirement Account pursuant to the surviving spouse's
election.
SIMPLIFIED EMPLOYEE PENSION PLANS. Section 408(k) of the Code allows eligible
employers to establish simplified employee pension plans for their employees
using individual retirement annuities. Under these plans the employer may,
within specified limits, make deductible contributions on behalf of the
employees to the individual retirement annuities. Employers intending to use the
Contract in connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS). Sections 408(p) and
401(k) of the Code allow eligible employers with 100 or fewer employees to
establish SIMPLE retirement plans for their employees. SIMPLE plans may be
structured as a SIMPLE retirement account using an IRA or as a Section 401(k)
qualified cash or deferred arrangement. In general, a SIMPLE plan consists of a
salary deferral program for eligible employees and matching or nonelective
contributions made by employers. Employers intending to use the Contract in
conjunction with SIMPLE plans should seek competent tax and legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS
(TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND
YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations. Under Section 403(b), any contract used for a 403(b) plan must
provide that distributions attributable to salary reduction contributions made
after 12/31/88, and all earnings on salary reduction contributions, may be made
only on or after the date the employee:
.. attains age 59 1/2,
.. separates from service,
.. dies,
.. becomes disabled, or
.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).
These limitations do not apply to withdrawals where Lincoln Benefit is directed
to transfer some or all of the Contract Value to another 403(b) plan.
Generally, we do not accept Employee Retirement Income Security Act of 1974
(ERISA) funds in 403(b) contracts.
CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS. Sections 401(a)
and 403(a) of the Code permit corporate employers to establish various types of
tax favored retirement plans for employees. Self-employed individuals may
establish tax favored retirement plans for themselves and their employees. Such
retirement plans (commonly referred to as "H.R.10" or "Keogh") may permit the
purchase of annuity contracts.
STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION DEFERRED COMPENSATION
PLANS. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible deferred
compensation plan. In eligible governmental plans, all assets and income must be
held in a trust/ custodial account/annuity contract for the exclusive benefit of
the participants and their beneficiaries. To the extent the Contracts are used
in connection with a non-governmental eligible plan, employees are considered
general creditors of the employer and the employer as owner of the Contract has
the sole right to the proceeds of the Contract. Under eligible 457 plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan.
44 PROSPECTUS
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
Lincoln Benefit's annual report on Form 10-K for the year ended December 31,
2002 is incorporated herein by reference, which means that it is legally a part
of this prospectus.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act of 1934 are also incorporated herein by reference, which
means that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K electronically on the SEC's "EDGAR" system using
the identifying number CIK No. 0000910739. The SEC maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. the address of the
site is http://www.sec.gov. You also can view these materials at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. For
more information on the operations of SEC's Public Reference Room, call
1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at Lincoln Benefit Life Company, 2940 South 84th Street,
Lincoln, Nebraska, 68516 or 800-865-5237.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
We may advertise the performance of the Variable Subaccounts, including yield
and total return information. Total return represents the change, over a
specified period of time, in the value of an investment in a Variable Subaccount
after reinvesting all income distributions. Yield refers to the income generated
by an investment in a Variable Subaccount over a specified period.
All performance advertisements will include, as applicable, standardized yield
and total return figures that reflect the deduction of insurance charges, the
contract maintenance charge, and withdrawal charge. Performance advertisements
also may include total return figures that reflect the deduction of insurance
charges, but not the contract maintenance or withdrawal charges. The deduction
of such charges would reduce the performance shown. In addition, performance
advertisements may include aggregate average, year-by-year, or other types of
total return figures.
Performance information for periods prior to the inception date of the Variable
Subaccounts will be based on the historical performance of the corresponding
Portfolios for the periods beginning with the inception dates of the Portfolios
and adjusted to reflect current Contract expenses. You should not interpret
these figures to reflect actual historical performance of the Variable Account.
We may include in advertising and sales materials tax deferred compounding
charts and other hypothetical illustrations that compare currently taxable and
tax deferred investment programs based on selected tax brackets. Our
advertisements also may compare the performance of our Variable Subaccounts
with: (a) certain unmanaged market indices, including but not limited to the Dow
Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman
Bond Index; and/or (b) other management investment companies with investment
objectives similar to the underlying funds being compared. In addition, our
advertisements may include the performance ranking assigned by various
publications, including the Wall Street Journal, Forbes, Fortune, Money,
Barron's, Business Week, USA Today, and statistical services, including Lipper
Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, and SEI.
45 PROSPECTUS
APPENDIX A
ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
The Accumulation Unit Value is a unit of measure used to calculate the value of
a Contract Owner's interest in a Variable Subaccount for any Valuation Period.
An Accumulation Unit Value does not reflect deduction of certain charges under
the Contract that are deducted from your Contract Value, such as the
Administrative Expense Charge. The beginning value for 2001 reflects the
Accumulation Unit Value as of August 10, 2001, the effective date of the
Registration Statement for this Contract. We maintain different Accumulation
Unit Values for Base Contracts with different combinations of optional riders
because the charges deducted from the Subaccounts are different. This Appendix
includes Accumulation Unit Values reflecting the highest and lowest available
Contract charge combinations. The Statement of Additional Information, which is
available upon request without charge, contains the Accumulation Unit Values for
all the other available combinations of optional riders. A brief explanation of
how performance of the Subaccounts is calculated may also be found in the
Statement of Additional Information. Please contact us at 1-800-865-5237 to
obtain a copy of the Statement of Additional Information.
BASE POLICY WITH NO OPTIONAL RIDERS
Year ending December 31, 2001 Year ending December 31, 2002
FUND(1)
- -------------------------------------------------------------------------------------------
AIM Dent Demographics
Trends Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.77
Accumulation Unit
Value Ending $ 9.77 $ 6.537
Number of Units
Outstanding at End of 6,717 37,747
Year
- -------------------------------------------------------------------------------------------
Fidelity Equity-Income
Portfolio -- Service
Class 2
Accumulation Unit
Value Beginning $ 10.00 $ 9.63
Accumulation Unit
Value Ending $ 9.63 $ 7.873
Number of Units
Outstanding at End of 7,233 176,376
Year
- -------------------------------------------------------------------------------------------
Fidelity Investment
Grade Bond Portfolio
- -- Service Class 2
Accumulation Unit
Value Beginning $ 10.00 $ 10.15
Accumulation Unit
Value Ending $ 10.15 $ 11.021
Number of Units
Outstanding at End of 10,192 204,156
Year
- -------------------------------------------------------------------------------------------
Fidelity Overseas
Portfolio -- Service
Class 2
Accumulation Unit
Value Beginning $ 10.00 $9.35
Accumulation Unit
Value Ending $ 9.35 $ 7.339
Number of Units
Outstanding at End of 110 2,203
Year
- -------------------------------------------------------------------------------------------
Janus International
Value Portfolio:
Service Shares
Accumulation Unit
Value Beginning $ 10.00 $ 10.69
Accumulation Unit
Value Ending $ 10.69 $ 9.136
Number of Units
Outstanding at End of 391 14,107
Year
- -------------------------------------------------------------------------------------------
Janus Worldwide Growth
Portfolio: Service
Shares
Accumulation Unit
Value Beginning $ 10.00 $ 9.63
Accumulation Unit
Value Ending $ 9.63 $ 7.060
Number of Units
Outstanding at End of 3,165 97,061
Year
- -------------------------------------------------------------------------------------------
Lazard Emerging
Markets Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 9.92
Accumulation Unit
Value Ending $ 9.92 $ 9.639
Number of Units
Outstanding at End of 0 4,579
Year
- -------------------------------------------------------------------------------------------
LSA Aggressive Growth
Fund
AAccumulation Unit
Value Beginning $ 10.00 $ 9.41
Accumulation Unit
Value Ending $ 9.41 $ 6.348
Number of Units
Outstanding at End of 649 22,935
Year
- -------------------------------------------------------------------------------------------
LSA Balanced Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.64
Accumulation Unit
Value Ending $ 9.64 $ 7.768
Number of Units
Outstanding at End of 18,088 152,064
Year
- -------------------------------------------------------------------------------------------
LSA Basic Value Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.60
Accumulation Unit
Value Ending $ 9.60 $ 7.416
Number of Units
Outstanding at End of 13,440 193,154
Year
- -------------------------------------------------------------------------------------------
LSA Blue Chip Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.76
Accumulation Unit
Value Ending $ 9.76 $ 7.103
Number of Units
Outstanding at End of 3,387 91,543
Year
- -------------------------------------------------------------------------------------------
LSA Capital
Appreciation Fund
Accumulation Unit
Value Beginning $ 10.00 $ 10.03
Accumulation Unit
Value Ending $ 10.03 $ 7.059
Number of Units
Outstanding at End of 2,459 53,255
Year
- -------------------------------------------------------------------------------------------
LSA Disciplined Equity
Fund (2)
Accumulation Unit
Value Beginning $ 10.00 $ 9.59
Accumulation Unit
Value Ending $ 9.59 $ 7.073
Number of Units
Outstanding at End of 1,065 64,810
Year
- -------------------------------------------------------------------------------------------
LSA Diversified Mid
Cap Fund
Accumulation Unit
Value Beginning $ 10.00 $ 10.00
Accumulation Unit
Value Ending $ 10.00 $ 7.962
Number of Units
Outstanding at End of 9,409 97,423
Year
- -------------------------------------------------------------------------------------------
LSA Emerging Growth
Equity Fund
Accumulation Unit
Value Beginning $ 10.00 $ 10.06
Accumulation Unit
Value Ending $ 10.06 $ 5.768
Number of Units
Outstanding at End of 352 17,828
Year
- -------------------------------------------------------------------------------------------
LSA Equity Growth Fund
(2) (3)
Accumulation Unit
Value Beginning $ 10.00 $ 9.97
Accumulation Unit
Value Ending $ 9.97 $ 6.901
Number of Units
Outstanding at End of 1,703 27,593
Year
- -------------------------------------------------------------------------------------------
LSA Capital Growth
Fund (3)
Accumulation Unit
Value Beginning $ 10.00 $ 9.68
Accumulation Unit
Value Ending $ 9.68 $ 7.225
Number of Units
Outstanding at End of 856 31,959
Year
- -------------------------------------------------------------------------------------------
LSA Mid Cap Value Fund
Accumulation Unit
Value Beginning $ 10.00 $ 10.66
Accumulation Unit
Value Ending $ 10.66 $ 9.731
Number of Units
Outstanding at End of 7,420 82,491
Year
- -------------------------------------------------------------------------------------------
LSA Value Equity Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.62
Accumulation Unit
Value Ending $ 9.62 $ 7.389
Number of Units
Outstanding at End of 2,032 38,421
Year
- -------------------------------------------------------------------------------------------
MFS New Discovery
Series --Service Class
Accumulation Unit
Value Beginning $ 10.00 $ 10.35
Accumulation Unit
Value Ending $ 10.35 $ 6.963
Number of Units
Outstanding at End of 1,040 63,132
Year
- -------------------------------------------------------------------------------------------
MFS Utilities Series
- --Service Class
Accumulation Unit
Value Beginning $ 10.00 $ 8.96
Accumulation Unit
Value Ending $ 8.96 $ 6.813
Number of Units
Outstanding at End of 12,557 38,681
Year
- -------------------------------------------------------------------------------------------
PEA Science and
Technology Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 9.59
Accumulation Unit
Value Ending $ 9.59 $ 4.768
Number of Units
Outstanding at End of 906 18,884
Year
- -------------------------------------------------------------------------------------------
OpCap SmallCap
Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 10.09
Accumulation Unit
Value Ending $ 10.09 $ 7.802
Number of Units
Outstanding at End of 536 34,675
Year
- -------------------------------------------------------------------------------------------
Oppenheimer
International Growth
- -- Service Class
Accumulation Unit
Value Beginning $ 10.00 $ 9.11
Accumulation Unit
Value Ending $ 9.11 $ 6.781
Number of Units
Outstanding at End of 1,054 23,843
Year
- -------------------------------------------------------------------------------------------
Oppenheimer Main
Street Small Cap
Fund/VA -- Service
Class
Accumulation Unit
Value Beginning $ 10.00 $ 10.30
Accumulation Unit
Value Ending $ 10.30 $ 8.545
Number of Units
Outstanding at End of 2,185 52,157
Year
- -------------------------------------------------------------------------------------------
PIMCO Foreign Bond
Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 10.12
Accumulation Unit
Value Ending $ 10.12 $ 10.806
Number of Units
Outstanding at End of 575 49,021
Year
- -------------------------------------------------------------------------------------------
PIMCO Money Market
Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 10.04
Accumulation Unit
Value Ending $ 10.04 $ 10.048
Number of Units
Outstanding at End of 23,597 289,545
Year
- -------------------------------------------------------------------------------------------
PIMCO Total Return
Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 10.15
Accumulation Unit
Value Ending $ 10.15 $ 10.919
Number of Units
Outstanding at End of 22,113 370.,770
Year
- -------------------------------------------------------------------------------------------
Putnam High Yield Fund
- -- Class IB
Accumulation Unit
Value Beginning $ 10.00 $ 9.89
Accumulation Unit
Value Ending $ 9.89 $ 9.683
Number of Units
Outstanding at End of 4,328 49,831
Year
- -------------------------------------------------------------------------------------------
Putnam International
Growth and Income Fund
- -- Class IB
Accumulation Unit
Value Beginning $ 10.00 $ 9.44
Accumulation Unit
Value Ending $ 9.44 $ 8.034
Number of Units
Outstanding at End of 935 19,992
Year
- -------------------------------------------------------------------------------------------
Rydex OTC Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.80
Accumulation Unit
Value Ending $ 9.80 $ 5.913
Number of Units
Outstanding at End of 577 23,308
Year
- -------------------------------------------------------------------------------------------
Salomon Brothers
Variable All Cap Fund
Accumulation Unit
Value Beginning $ 10.00 $ 9.68
Accumulation Unit
Value Ending $ 9.68 $ 7.159
Number of Units
Outstanding at End of 1,864 101,018
Year
- -------------------------------------------------------------------------------------------
Van Kampen UIF High
Yield Portfolio
Accumulation Unit
Value Beginning $ 10.00 $ 9.49
Accumulation Unit
Value Ending $ 9.49 $ 8.683
Number of Units
Outstanding at End of 7,458 45,587
Year
- -------------------------------------------------------------------------------------------
Van Kampen LIT Growth
& Income Portfolio,
Class II
Accumulation Unit
Value Beginning $ 10.00 $ 9.64
Accumulation Unit
Value Ending $ 9.64 $ 8.108
Number of Units
Outstanding at End of 8,115 139,022
Year
- -------------------------------------------------------------------------------------------
46 PROSPECTUS
(1) Information is not shown for:
Alger American Growth Portfolio - Class S
Fidelity VIP Growth Portfolio - Service Class 2
PIMCO Real Return Portfolio - Administrative Shares
Rydex Sector Rotation Fund
Scudder VIT EAFE Equity Index Fund - Class B
Scudder VIT Equity 500 Index Fund - Class B
Scudder VIT Small Cap Index Fund - Class B
Van Kampen UIF U.S. Real Estate Portfolio, Class II
because they were first offered with the Contract on May 1, 2003.
48 PROSPECTUS
(2) Effective 5/1/03, the portfolio in which the LSA Disciplined Equity Fund
invests merged into the LSA Focused Equity Fund. Accordingly, as of 5/1/03, the
corresponding Variable Subaccount merged into the LSA Focused Equity Variable
Subaccount.
(3) Effective 5/1/03 the LSA Focused Equity Fund and the LSA Growth Equity Fund
changed their names to LSA Equity Growth Fund and LSA Capital Growth Fund,
respectively. We have made a corresponding change in the names of the Variable
Subaccounts that invest in those Funds.
BASE POLICY WITH ENHANCED DEATH BENEFIT RIDER, INCOME BENEFIT RIDER AND ENHANCED
EARNINGS DEATH BENEFIT RIDER (66-75)
Year ending December 31, Year ending December 31,
2001 2002
FUND(1)
- -------------------------------------------------------------------------------
AIM Dent Demographics
Trends Fund
Accumulation Unit
Value Beginning $10.00 $ 9.74
Accumulation Unit
Value Ending $ 9.74 $ 6.464
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Fidelity Equity-Income
Portfolio -- Service
Class 2
Accumulation Unit
Value Beginning $10.00 $ 9.60
Accumulation Unit
Value Ending $ 9.60 $ 7.786
Number of Units
Outstanding at End of 0 4,628
Year
- -------------------------------------------------------------------------------
Fidelity Investment
Grade Bond Portfolio --
Service Class 2
Accumulation Unit
Value Beginning $10.00 $ 10.12
Accumulation Unit
Value Ending $10.12 $10.898
Number of Units
Outstanding at End of 0 2,777
Year
- -------------------------------------------------------------------------------
Fidelity Overseas
Portfolio -- Service
Class 2
Accumulation Unit
Value Beginning $10.00 $ 9.32
Accumulation Unit
Value Ending $ 9.32 $ 7.257
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Janus International
Value Portfolio:
Service Shares
Accumulation Unit
Value Beginning $10.00 $ 10.66
Accumulation Unit
Value Ending $10.66 $ 9.034
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Janus Worldwide Growth
Portfolio: Service
Shares
Accumulation Unit
Value Beginning $10.00 $ 9.60
Accumulation Unit
Value Ending $ 9.60 $ 6.982
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Lazard Emerging Markets
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 9.89
Accumulation Unit
Value Ending $ 9.89 $ 9.532
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Aggressive Growth
Fund
Accumulation Unit
Value Beginning $10.00 $ 9.38
Accumulation Unit
Value Ending $ 9.38 $ 6.277
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Balanced Fund
Accumulation Unit
Value Beginning $10.00 $ 9.61
Accumulation Unit
Value Ending $ 9.61 $ 7.681
Number of Units
Outstanding at End of 0 790
Year
- -------------------------------------------------------------------------------
LSA Basic Value Fund
Accumulation Unit
Value Beginning $10.00 $ 9.57
Accumulation Unit
Value Ending $ 9.57 $ 7.333
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Blue Chip Fund
Accumulation Unit
Value Beginning $10.00 $ 9.73
Accumulation Unit
Value Ending $ 9.73 $ 7.024
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Capital
Appreciation Fund
Accumulation Unit
Value Beginning $10.00 $ 10.00
Accumulation Unit
Value Ending $10.00 $ 6.980
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Disciplined Equity
Fund (2)
Accumulation Unit
Value Beginning $10.00 $ 9.56
Accumulation Unit
Value Ending $ 9.56 $ 6.961
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Diversified Mid Cap
Fund
Accumulation Unit
Value Beginning $10.00 $ 9.96
Accumulation Unit
Value Ending $ 9.96 $ 7.866
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Emerging Growth
Equity Fund
Accumulation Unit
Value Beginning $10.00 $ 10.03
Accumulation Unit
Value Ending $10.03 $ 5.704
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Equity Growth Fund
(2) (3)
Accumulation Unit
Value Beginning $10.00 $ 9.94
Accumulation Unit
Value Ending $ 9.94 $ 6.824
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Capital Growth Fund
(3)
Accumulation Unit
Value Beginning $10.00 $ 9.66
Accumulation Unit
Value Ending $ 9.66 $ 7.142
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Mid Cap Value Fund
Accumulation Unit
Value Beginning $10.00 $ 10.63
Accumulation Unit
Value Ending $10.63 $ 9.602
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
LSA Value Equity Fund
Accumulation Unit
Value Beginning $10.00 $ 9.59
Accumulation Unit
Value Ending $ 9.59 $ 7.306
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
MFS New Discovery
Series --Service Class
Accumulation Unit
Value Beginning $10.00 $ 10.32
Accumulation Unit
Value Ending $10.32 $ 6.886
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
MFS Utilities Series
- --Service Class
Accumulation Unit
Value Beginning $10.00 $ 8.93
Accumulation Unit
Value Ending $ 8.93 $ 6.737
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
The UIF High Yield
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 9.46
Accumulation Unit
Value Ending $ 9.46 $ 8.556
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
PEA Science and
Technology Portfolio
Accumulation Unit
Value Beginning $10.00 $ 9.56
Accumulation Unit
Value Ending $ 9.56 $ 4.715
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
OpCap SmallCap
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 10.06
Accumulation Unit
Value Ending $10.06 $ 7.715
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Oppenheimer
International Growth --
Service Class
Accumulation Unit
Value Beginning $10.00 $ 9.08
Accumulation Unit
Value Ending $ 9.08 $ 6.705
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Oppenheimer Main Street
Small Cap Fund/VA --
Service Class
Accumulation Unit
Value Beginning $10.00 $ 10.27
Accumulation Unit
Value Ending $10.27 $ 8.450
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
PIMCO Foreign Bond
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 10.09
Accumulation Unit
Value Ending $10.09 $10.686
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
PIMCO Money Market
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 10.01
Accumulation Unit
Value Ending $10.01 $ 9.936
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
PIMCO Total Return
Portfolio
Accumulation Unit
Value Beginning $10.00 $ 10.12
Accumulation Unit
Value Ending $10.12 $10.797
Number of Units
Outstanding at End of 0 2,792
Year
- -------------------------------------------------------------------------------
Putnam High Yield Fund
- -- Class IB
Accumulation Unit
Value Beginning $10.00 $ 9.86
Accumulation Unit
Value Ending $ 9.86 $ 9.576
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Putnam International
Growth and Income Fund
- -- Class IB
Accumulation Unit
Value Beginning $10.00 $ 9.42
Accumulation Unit
Value Ending $ 9.42 $ 7.944
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Rydex OTC Fund
Accumulation Unit
Value Beginning $10.00 $ 9.77
Accumulation Unit
Value Ending $ 9.77 $ 5.847
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Salomon Brothers
Variable All Cap Fund
Accumulation Unit
Value Beginning $10.00 $ 9.65
Accumulation Unit
Value Ending $ 9.65 $ 7.079
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
Van Kampen LIT Growth &
Income Portfolio, Class
II
Accumulation Unit
Value Beginning $10.00 $ 9.61
Accumulation Unit
Value Ending $ 9.61 $ 8.017
Number of Units
Outstanding at End of 0 0
Year
- -------------------------------------------------------------------------------
49 PROSPECTUS
(1) Information is not shown for:
Alger American Growth Portfolio - Class S
Fidelity VIP Growth Portfolio - Service Class 2
PIMCO Real Return Portfolio - Administrative Shares
Rydex Sector Rotation Fund
Scudder VIT EAFE Equity Index Fund - Class B
Scudder VIT Equity 500 Index Fund - Class B
Scudder VIT Small Cap Index Fund - Class B
Van Kampen UIF U.S. Real Estate Portfolio, Class II
because they were first offered with the Contract on May 1, 2003.
(2) Effective 5/1/03, the portfolio in which the LSA Disciplined Equity Fund
invests merged into the LSA Focused Equity Fund. Accordingly, as of 5/1/03, the
corresponding Variable Subaccount merged into the LSA Focused Equity Variable
Subaccount.
(3) Effective 5/1/03 the LSA Focused Equity Fund and the LSA Growth Equity Fund
changed their names to LSA Equity Growth Fund and LSA Capital Growth Fund,
respectively. We have made a corresponding change in the names of the Variable
Subaccounts that invest in those Funds.
51 PROSPECTUS
APPENDIX B
MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The Market Value Adjustment is based on the following:
I = the Treasury Rate for a maturity equal to the Guarantee Period for
the week preceding the establishment of the Guarantee Period;
N = the number of whole and partial years from the date we receive
the withdrawal, transfer, or death benefit request, or from the
Payout State Date to the end of the Guarantee Period.
Treasury Rate means the U.S. Treasury Note Constant Maturity yield as reported
in Federal Reserve Bulletin Release H.15.
The Market Value Adjustment factor is determined from the following formula:
.9 X [I-(J +.0025)] X N
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount transferred, withdrawn, paid as a death benefit,
or applied to an Income Plan from a Guarantee Period at any time other than
during the 30-day period after such Guarantee Period expires.
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Withdrawal: End of Contract Year 3
I (5-Year Treasury
Rate): 4.50%
NOTE: These examples assume that premium taxes are not applicable and that
previous withdrawals have not been taken.
EXAMPLE 1: (ASSUMES DECLINING INTEREST RATES)
Step 1: Calculate Contract = $10,000.00 X (1.045)/3/= 11,411.66
Value at End of Contract Year
3:
Step 2: Calculate the Free =.15 X ( $10,000.00) = $1,500.00 (GREATER
Withdrawal Amount: THAN $1,411.66 EARNINGS IN THE CONTRACT)
Step 3: Calculate the
Withdrawal Charge:
Under the Contract, earnings are deemed to be withdrawn before Purchase
Payments. Accordingly, in this example, the amount of the Purchase Payment
eligible for free withdrawal would equal the Free Withdrawal Amount less the
interest credited or 88.34 (1,500.00 - 1,411.66)
Therefore, the Withdrawal
Charge would be =.07 X ( $10,000 - $88.34) = $693.82
Step 4: Calculate the Market I = 4.50%
Value Adjustment: J = 4.20% (5-Year Treasury Rate at time of
withdrawal)
730 DAYS
N = -------- = 2
365 DAYS
Market Value Adjustment Factor:.9 X [I - (J
+.0025)] X N
=.9 X [.045 - (.042 +.0025)] X 2 =.0009
Market Value Adjustment = Market Value
Adjustment Factor X Amount
Subject To Market Value Adjustment:
=.0009 X $11,411.66 = $10.27
Step 5: Calculate the amount = $11,411.66 - $693.82 + $ 10.27 =
received by Contract Owner as a $10,728.11 result of full withdrawal at the end
of Contract Year 3:
52 PROSPECTUS
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1: Calculate Contract Value at End of Contract Year 3: = $10,000.00 X (1.045)/3/ = $11,411.66
Step 2: Calculate The Free Withdrawal Amount: =.15 X ( $10,000.00) = $1,500.00 (GREATER THAN $1,411.66 IN
EARNINGS)
Step 3: Calculate the Withdrawal Charge:
As above, in this example, the amount of the Purchase Payment eligible for free
withdrawal would equal the Free Withdrawal Amount less the interest credited or
88.34 ( 1,500 -
1,411.66). Therefore, the Withdrawal Charge would be =.07 X ( $10,000.00 -
$88.34) = $693.82
Step 4: Calculate the Market Value Adjustment:
J = 4.80% (5-Year Treasury Rate at time of withdrawal)
730 DAYS
N = ----------- = 2
365 DAYS
MARKET VALUE ADJUSTMENT FACTOR:
.9 X [I - (J +.0025)] X N =.9 X [(.045 -(.048 +.0025)] X (2) = -.0099
MARKET VALUE ADJUSTMENT =
MARKET VALUE ADJUSTMENT FACTOR X AMOUNT SUBJECT TO MARKET VALUE ADJUSTMENT:
= -.0099 X $11,411.66 = -($112.98)
Step 5: Calculate the amount received by Contract Owner as = $11,411.66 - $693.82 - $112.98 = $10,604.86
a result of full withdrawal at the end of Contract Year 3:
53 PROSPECTUS
APPENDIX C
CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT AMOUNT
- --------------------------------------------------------------------------------
EXAMPLE 1: In this example, assume that the oldest Contract Owner is age 55 at
the time the Contract is issued and elects the Enhanced Earnings Death Benefit
Rider when the Contract is issued. The Contract Owner makes an initial purchase
payment of $100,000. After four years, the Contract Owner dies. On the date
Lincoln Benefit receives Due Proof Of Death, the Contract Value is $125,000.
Prior to his death, the Contract Owner did not make any additional purchase
payments or take any withdrawals.
Excess of Earnings Withdrawals = 0
Purchase Payments in the 12 months after the = 0
Rider Date and prior to Death
In-Force Premium = $100,000
( $100,000 + 0 - 0)
In-Force Earnings = $25,000
( $125,000
- $100,000)
ENHANCED EARNINGS PROTECTION DEATH BENEFIT** = 50% * $25,000 =
$12,500
Since 50% of In-Force Earnings is less than 100% of the In-Force Premium
(excluding purchase payments in the 12 months prior to death), the In-Force
Earnings are used to compute the Enhanced Earnings Death Benefit amount.
EXAMPLE 2: ELECTED WHEN CONTRACT WAS ISSUED WITH SUBSEQUENT WITHDRAWALS
EXAMPLE 2. In the second example, assume the same facts as above, except that
the Contract Owner has taken a withdrawal of $10,000 during the second year of
the Contract. At the time the withdrawal is taken, the Contract Value is
$105,000. Here, $5,000 of the withdrawal is in excess of the In-Force Earnings
at the time of the withdrawal. The Contract Value on the date Lincoln Benefit
receives Due Proof of Death will be assumed to be $114,000.
Excess-of-Earnings Withdrawals = $5,000 ( $ 10,000 - $5,000)
Purchase payments in the 12 months after the Rider Date and prior = 0
to Death
In-Force Premium = $ 95,000 ( $100,000 + 0 - $
5,000)
In-Force Earnings = $19,000 ( $ 114,000 - $95,000)
Enhanced Earnings Death Benefit = 50% x $19,000 = $9,500
Since 50% of In-Force Earnings is less than 100% of the In-Force Premium
(excluding purchase payments in the 12 months after the Rider Date and prior to
death), the In-Force Earnings are used to compute the Enhanced Earnings Death
Benefit amount.
EXAMPLE 3. This third example is intended to illustrate the effect of adding the
Enhanced Earnings Death Benefit Rider after the Contract has been issued and the
effect of later purchase payments. In this example, assume that the oldest
Contract Owner is age 65 on the Rider Date. At the time the Contract is issued,
the Contract Owner makes a purchase payment of $100,000. After two years pass,
the Contract Owner elects to add the Enhanced Earnings Death Benefit Rider. On
the date this Rider is added, the Contract Value is $110,000. Two years later,
the Contract Owner withdraws $50,000. Immediately prior to the withdrawal, the
Contract Value is $130,000. Another two years later, the Contract Owner makes an
additional purchase payment of $40,000. Two years later, the Contract Owner dies
with a Contract Value of $140,000 on the date Lincoln Benefit receives Due Proof
of Death.
Excess-of-Earnings Withdrawals = $30,000 ( $50,000 - $20,000)
Purchase payments in the 12 months
after the Rider Date and prior to 0
Death =
$120,000 ( $110,000 + $40,000 -
In-Force Premium = $30,000)
In-Force Earnings = $20,000 ( $140,000 - $120,000)
Enhanced Earnings Death Benefit = 40% of $20,000 = $8,000
In this example, In-Force Premium is equal to the Contract Value on the date the
Rider was issued plus the additional purchase payment and minus the
Excess-of-Earnings Withdrawal.
54 PROSPECTUS
Since 40% of In-Force Earnings is less than 80% of the In-Force Premium
(excluding purchase payments in the 12 months after the Rider Date and prior to
death), the In-Force Earnings are used to compute the Enhanced Earnings Death
Benefit amount.
55 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
DESCRIPTION
- --------------------------------------------------------------------------------
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
- --------------------------------------------------------------------------------
THE CONTRACT
- --------------------------------------------------------------------------------
Purchases of Contract
- --------------------------------------------------------------------------------
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Standardized Total Returns
- --------------------------------------------------------------------------------
Non-standardized Total Returns
- --------------------------------------------------------------------------------
Adjusted Historical Total Returns
- --------------------------------------------------------------------------------
Net Investment Factor
- --------------------------------------------------------------------------------
Calculation of Accumulation Unit Values
- --------------------------------------------------------------------------------
Calculation of Variable Income Payments
- --------------------------------------------------------------------------------
Calculation of Annuity Unit Values
- --------------------------------------------------------------------------------
GENERAL MATTERS
- --------------------------------------------------------------------------------
Incontestability
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Settlements
- --------------------------------------------------------------------------------
Safekeeping of the Variable Account's Assets
- --------------------------------------------------------------------------------
Premium Taxes
- --------------------------------------------------------------------------------
Tax Reserves
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
APPENDIX A: ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PREPOSSESSED.
56 PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Pursuant to Item 511 of Regulation S-K, the Registrant hereby represents that
the following expenses totaling approximately $31,000.00 will be incurred or are
anticipated to be incurred in connection with the issuance and distribution of
the securities to be registered: registration fees - $0.00; cost of printing and
engraving - $25,000.00 (approximate); legal fees - $5,000.00 (approximate) and
accounting fees - $1,000.00 (approximate). All amounts are estimated, for the
period ending May 1, 2003 for the continuous offering of shares, but are not
deducted from proceeds.
Item 15. Indemnification of Directors and Officers
The Articles of Incorporation of Lincoln Benefit Life Company (Depositor)
provide for the indemnification of its directors and officers against expenses,
judgments, fines and amounts paid in settlement as incurred by such person, so
long as such person shall not have been adjudged to be liable for negligence or
misconduct in the performance of a duty to the Company. This right of indemnity
is not exclusive of other rights to which a director or officer may otherwise be
entitled.
The By-Laws of ALFS, Inc. (Distributor) provide that the corporation will
indemnify a director, officer, employee or agent of the corporation to the full
extent of Delaware law. In general, Delaware law provides that a corporation may
indemnify a director, officer, employee or agent against expenses, judgments,
fines and amounts paid in settlement if that individual acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
No indemnification shall be made for expenses, including attorney's fees, if the
person shall have been judged to be liable to the corporation unless a court
determines such person is entitled to such indemnity. Expenses incurred by such
individual in defending any action or proceeding may be advanced by the
corporation so long as the individual agrees to repay the corporation if it is
later determined that he or she is not entitled to such indemnification.
Under the terms of the form of Underwriting Agreement, the Depositor agrees to
indemnify the Distributor for any liability that the latter may incur to a
Contract owner or party-in-interest under a Contract, (a) arising out of any act
or omission in the course of or in connection with rendering services under such
Agreement, or (b) arising out of the purchase, retention or surrender of a
Contract; provided that the Depositor will not indemnify the Distributor for any
such liability that results from the latter's willful misfeasance, bad faith or
grow negligence, or from the reckless disregard by the latter of its duties and
obligations under the Underwriting Agreement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the forgoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suite or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16. Exhibits
Exh. No. Description
1 Form of Principal Underwriting Agreement*
4(a) Form of Variable Annuity Contract***
4(b) Form of Application***
5 Opinion and Consent of Counsel regarding legality*****
21 Subsidiaries of Registrant - N/A
23(a) Consent of Independent Auditors (filed herewith)
23(b) Consent of Attorneys (filed herewith)
99 Powers of Attorney for Lawrence W. Dahl, Margaret G. Dyer,
Marla G. Friedman, Douglas F. Gaer, John C. Lounds, J. Kevin
McCarthy, Samuel H. Pilch, Steven E. Shebik, Casey J. Sylla,
Michael J. Velotta, B. Eugene Wraith, James P. Zils
(filed herewith)
- -------------------------------------------------
* Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4 for Lincoln Benefit Life Variable
Annuity Account (File No. 333-50545, 811-07924) filed January 28, 1999
** Incorporated herein by reference to the Registration Statement on Form S-6
for the Lincoln Benefit Life Variable Life Account (File No. 333-47717)
filed March 11, 1998
*** Incorporated herein by reference to the Registration Statement on Form N-4
for Lincoln Benefit Life Variable Annuity Account (File No. 333-61146,
811-07924) filed May 17, 2001
**** Incorporated herein by reference to the Registrant's Form 10-K filed March
29, 2001.
*****Incorporated herein by reference to the Registration Statement on Form S-3
for Lincoln Benefit Life Company (File No. 333-66452) filed August 1, 2001.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the determining of any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liabilities under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted in directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item. EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from Lincoln Benefit Life Company's
Annual Report on Form 10-K for the year ended December 31, 2002 and from the
Statement of Additional Information (which is part of Registration Statement No.
333-61146) have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, (which report
expresses an unqualified opinion and includes an explanatory paragraph relating
to the restatement described in Note 12), and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The financial statements of Lincoln Benefit Life Variable Annuity Account as of
December 31, 2002 and for each of the periods in the two year period then ended
incorporated herein by reference from the Statement of Additional Information
(which is part of Registration Statement No. 333-61146), have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
SIGNATURES
As required by the Securities Act of 1933, the Registrant has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this amended Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lincoln and
State of Nebraska on the 14 day of April , 2003
LINCOLN BENEFIT LIFE COMPANY (Registrant)
By: /s/ B. Eugene Wraith
---------------------------------------------------------
B. Eugene Wraith
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following directors and
principal officers of Lincoln Benefit Life Company in their respective
capacities on the 14th day of April , 2003.
Name Title Date
- ------------------------------ -------------------------- --------
/s/ B. Eugene Wraith Director, President and Chief Operating Officer April 14, 2003
- -------------------------------
(Principal Executive Officer)
/s/ Samuel H. Pilch Group Vice President and Controller April 14, 2003
- ------------------------------
(Principal Accounting Officer)
/s/ James P. Zils Treasurer April 14, 2003
- -----------------------------
(Principal Financial Officer)
/s/ Lawrence W. Dahl Director, Executive Vice President April 14, 2003
- ----------------------------
/s/ Margaret G. Dyer Director April 14, 2003
- ----------------------------
/s/ Marla G. Friedman Director April 14, 2003
- ----------------------------
/s/ Douglas F. Gaer Director, Executive Vice President April 14, 2003
- ----------------------------
/s/ John C. Lounds Director April 14, 2003
- ----------------------------
/s/ J. Kevin McCarthy Director April 14, 2003
- ----------------------------
/s/ Steven E. Shebik Director, Senior Vice President and April 14, 2003
- ---------------------------- Chief Financial Officer
/s/ Michael J. Velotta Director, Senior Vice President, April 14, 2003
- ---------------------------- General Counsel and Secretary
/s/ Casey J. Sylla Director, Chairman of the Board and April 14, 2003
- ---------------------------- Chief Executive Officer
EXHIBITS
Exhibit No. Description
23(a) Independent Auditors' Consent
23(b) Consent of Attorneys
99 Powers of Attorney for Lawrence W. Dahl, Margaret G. Dyer,
Marla G. Friedman, Douglas F. Gaer, John C. Lounds, J. Kevin
McCarthy, Samuel H. Pilch, Steven E. Shebik, Casey J. Sylla,
Michael J. Velotta, B. Eugene Wraith, James P. Zils